Comparing our FIRE Portfolios + Asset Allocations (Part 2)
Two Sides of FI
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Beware the Bias of Recent Performance
Investors must be cautious of recency bias, especially when evaluating investment performance over the last 10 to 12 years, as it can skew their understanding and lead to incorrect conclusions. This bias is common among newer investors who may solely rely on recent data without considering the broader historical context. Analyzing a portfolio's performance during downturns relative to an all-stock approach reveals valuable insights, highlighting that diversified portfolios often mitigate losses during tough market conditions.
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