FAQ
What is recency bias in investing, and why is it dangerous?
Recency bias is the tendency to assume what happened recently will keep happening. In markets, that can lead to chasing performance after a strong run or panic-selling after a drawdown. A better approach is to anchor decisions to your long-term plan and risk target, not last quarter’s headlines.
What is anchoring bias, and how does it show up with stocks?
Anchoring is fixating on a past reference point like a prior stock price and assuming it “must” return there. But markets don’t have to revisit old prices on your timeline (or ever). A cleaner question is: “If I didn’t own this today, would I buy it now at this price and risk?”
Does having more financial information help investors make better decisions?
Not automatically. The episode argues that information overload often leads to more “fast thinking” decisions (emotional, impulsive) rather than slow, deliberate thinking. With modern trading tools, acting on fear or excitement is frictionless so having a rules-based plan matters more than having another news feed.
How should high earners respond when the media makes markets feel urgent?
Step back and reconnect the fear to your actual time horizon. Most scary headlines don’t change a 10–30 year plan, but they can trigger expensive short-term moves. Use your plan as the filter: if nothing structural changed in your goals, cash-flow, or risk capacity, you usually don’t need a portfolio overhaul.
What do successful professionals commonly misunderstand about money?
Many underestimate the power of compounding over decades and end up delaying meaningful spending, giving, or charitable impact. Another common mismatch is control: business success rewards decisive action, while investing often punishes reactive changes because expectations are already “priced in.” The goal is to control process, not predict the next headline.