◈ GLOSSARY · MONEY MINDSET
Recency Bias.
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
The mental shortcut of treating whatever happened recently as the new normal — projecting the last 12 months forward as if they'll keep going. It's the engine behind both bubbles ('it only goes up') and panics ('it'll never recover'). The honest caveat: long-run averages exist for a reason; the recent past is almost never a good guide to the next decade.
◈ IN PRACTICE
Example
Tech stocks return 25% a year for three years running, so you load up — right as the trailing return peaks. Or after a 20% drawdown you swear off stocks forever, just before a multi-year recovery. Same bias, opposite direction.
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