Recency: The Rearview Mirror Trap

Your brain weights the last chapter over the whole book: two loud years overwrite a century of base rates. That's why every boom mints 'new era' believers and every bust mints permanent bears — both crowds extrapolating a season into a climate. The full historical record exists precisely to overrule your last eighteen months.

The purest symptom: money piling into whatever just performed — the hot fund, hot sector, hot everything. But 'just performed' often means 'now expensive,' and the fund-flow studies are merciless: chased performance reliably disappoints the chasers who arrive after it. You met this as the behavior gap's buy-high move. Recency is why it feels so safe.

Careful, because markets are subtle here: measured momentum over specific windows is a real, tested pattern — you learned that in the technicals lesson, and our engine scores it as one dimension. The difference is discipline: a tested rule harvesting a defined window versus a feeling extrapolating a headline. Same raw material; one is a system, the other is a mood with a brokerage account.

Before any move sparked by recent events, ask: am I acting on new information about the BUSINESS, or on the recent direction of the PRICE? Direction alone is the mirror talking. This one question, asked out loud, catches most recency trades red-handed before they cost anything.

Policy ranges that cap how far any enthusiasm can push an allocation. Rebalancing — the anti-recency machine — mechanically trimming what just won. Automatic buys that ignore what's hot. And in our engine's case, adaptive weights that shift only a few points per cycle by rule, so even the machine can't chase. Recency wants extremes; every one of these structures denies it the steering wheel.