Part 3: The Journey of a DIY Investor | The Temptation of Hot Stocks – Recency Bias

As markets began to rally, Mark couldn’t resist loading up on tech stocks that had recently performed well, falling into the trap of recency bias. He assumed that the stellar performance of these stocks would continue indefinitely, and as a result, overconcentrated his portfolio.

When the market corrected, Mark was caught off guard by the losses. Had Sarah been there, she would have helped him avoid this mistake by focusing on long-term strategy rather than short-term gains. With her guidance, Mark would have been reminded that successful investing is about discipline and sticking to a well-thought-out plan, not chasing trends.