This is the tendency to fail to incorporate prior known probabilities which are pertinent to the decision at hand. Caution: Don’t read on if you are 40 years of age and above! Here’s an interesting question for the rest of you: Why aren’t more young people investing in the stock market? Could it be that you/they are neglecting prior base rates and focusing too much on recent media hyped news about stock market corrections, which are actually insignificant in the long run? And by that ignoring the long term upwards trajectory of all stock markets? Have a look at these statistics:

1. Whoever held shares for a minimum of 15 years would have never made losses, and this goes back to 1870.
2. For holding periods above 10 years, the returns are minimum 8% per year (incl. dividends re-invested).
3. Stocks fell almost 20% in late 2011, but do you still recall that?  Probably not.  Are you afraid of the current 10% ...

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