When stock markets were falling sharply late last year, the media was full of analysis of why it was happening and what might happen next. In 2019, with stocks heading sharply upwards, many of the same people are equally wise after the fact.
Behavioural economics refers to a cognitive failing called the ‘narrative fallacy’. This refers to our in-built need to fit often random events into tidy narratives where cause and effect are clear. For investors, this can be a trap.
Check out the importance of understanding Narrative Vs Data and why we at G3, prefer to use the evidence approach to investing. Click here