Five Reasons Why Stocks Have Fallen
If the market’s recent dive led you to buy or sell, you’re doing this investing business wrong.
Bloomberg, October 31, 2018
A few weeks ago, we discussed “retrospective prescience” – why everyone is so amazingly good at explaining what just happened. Apparently unaware of our own hindsight bias, we spin comforting narratives to help us understand what just happened, despite having no knowledge of this in advance.
My explanation for the correction is at risk for the same behavioral errors. One of the advantages of writing in public is I can use what was said prior to create an a priori rather than a posteriori version.
So where are we now? Here are my five explanations . . .