Jimit Modi, CEO and Founder, Samco Securities
Last week, when Mumbai received the heaviest rainfall of the century, many residents accepted that there would be floods the next day. When there is a plane crash once a year, travelers avoid flying for months. At the same time, some more safe window seats also struggle to make extra payments. The same trap is seen in investment. Investors take the most recent incident as if it is destiny. Then no matter how rare the incident is. This is called Recycancy BIS.
Recycancy BIS is a tendency to believe that whatever has happened will continue. We start giving more importance to the latest event, ignoring the long pattern. The worse in this is that rare, extraordinary events dominate our decisions rather than frequent frequent events.
Examples of daily recycation bias
For example, the Air India plane crashed earlier this year, which was a very sad event. Only one passenger sitting on the 11A seat survived. Then what was it suddenly the 11A seat of the plane was considered to be the safest. There was a huge increase in demand to get it during air travel.
Take another example of August 19, 2025. On this day, a record -breaking rain was recorded in Mumbai and surrounding districts. Although the sky cleared the next day, but many people left work due to fear that there would be flood again.
These are both rare events, often not. Nevertheless, they had a deeper impact on people’s behavior than safe flights of years or thousands of dried monsoon.
Recyclary bias appears daily in the stock market
Now if you talk about the stock market, then the recycancy bias appears daily. Investors are afraid that the crash is endless when a sharp decline. Similarly, after the boom in the market, they hope that the shares will double the money every month. This prejudice promotes both nervousness and enthusiasm, which makes investors unaware of the market’s Cy Clevel Reality.
The history of the stock market is filled with examples of recycancy bias. Such as 2000 IT Bubble, 2008 Global Financial Crisis (GFC), and Kovid-19 crisis of 2020. Each one gave birth to a large scale vigorous selling. Not only did the recovery happen after every incident, but the market also recorded new peaks. Those who leaned to the recycancy bias remained in losses and were deprived of the wealth created in recovery.
Stock market closed on August 27, BSE and NSE will not be traded due to Ganesh Chaturthi
How to eats wealth, recycancy bias
When investors allow short term uncertainties take their decisions, the wealth is quietly destroyed. The decisions of investors that cause this include- selling good quality shares of fear, more for Momentum during enthusiasm. Investors miss the compounding power to be received on the sale of shares in a short time due to short term uncertainties. The problem is often not of poor business, but of poor behavior.
At the same time, investors who do not get stuck in the trap of recycancy bias get a good lead. They shop when the market gets nervous. Keeps investment intact during temporary instability. Rely on the basic things, not on the headlines.
For example, when the US tariff was announced in April this year, Nifty saw her lower level of 2025. Since then it has not gone below that level. This reminds us that nervousness often coincides with opportunity.
Dividend Stock: Dividend of ₹ 47 on every stock, 26 August record date; Price climbed 26% in 6 months
Ways to overcome recycancy bias
- Look at the 10-sight chart, not the trick of 10-day.
- Decide on basic things and basis of valuations, not on the basis of noise or headlines.
- Adopt a checklist-based process to avoid reaction in impulse or impatience.
- Always separate the signs from the noise.
Remember that the market will always swing between disaster and enthusiasm but both are not permanent. Wealth Creation does not react to the latest headline, but by opposing that the recent past predicts the future.
The recycancy bias is natural, but it stops us from looking at the big picture. Markets run in cycles, not in straight lines. A decline or a momentum never defines long term. In investment, the greatest achievement is not access to more information, but then the ability to remain rational when others are unable to do so.
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