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Episode 056: Dr. Daniel Crosby on the behavioral investor, host Rick Ferri

Bogleheads On Investing Podcast

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The Primacy Effect of Memory

The way that our brain works, we have sort of what's called a primacy effect. We remember things that come at the first part of the sequence. So when somebody is watching Silicon Valley bank collapse, they have a very vivid, very salient memory of the great financial crisis. They have a less salient memory of 10 years in between where they were pop and double digit returns every year. The same thing is true of markets. We miss remember things all the time. And so it's confusing what is loud with what is likely.

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