Top? Beware Your Confirmation Bias
“Are we in the 6th, 8th, or 9th inning? I don’t know, but I suspect the beginning of this bull is further away than the end.” –Me, 5 days ago I always hate the after-the-fact explanations of why the market is doing anything on any given day — but it’s hard… Read More The post Top? Beware Your Confirmation Bias appeared first on The Big Picture .
Experts caution against the influence of confirmation bias in interpreting market trends. The current surge in Crude Oil prices, soaring above $110 per barrel, has many investors on edge, as does the uncertainty surrounding CoreWeave and Private Credit Alt defaults. People often select data that supports their pre-existing beliefs, leading to a skewed understanding of the situation.
Reflecting on past writings, the author finds it challenging to embrace either a bullish or bearish viewpoint, instead seeking contradictory evidence.
A chart from Nicholas Colas of Datatrek illustrates three-year rolling returns for the Nasdaq, suggesting that bubbles typically form around technology and are not imminent. Despite having experienced double-digit gains in equities for the past four years, the magnitude of the current rise is notably lower than during the dotcom peak of 1996-99. While the conclusion is not definitive, the act of searching for data-driven insights instead of relying solely on emotional reactions proves enlightening.
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