Personal Finance Essentials
Illusion of Attention Bias
The Psychology of Investing > Illusion of Attention Bias
You might be paying more attention to the news than ever, but does that mean you’re paying attention to the news that matters?
In one famous study, subjects were shown a video of people playing basketball and asked to count how many times each ball was bounced on the floor. Those watching the video focused so intently on the ball that they failed to notice a person in a gorilla costume walking across the court. What we focus on can cause us to completely miss what we should be seeing.
Other studies have found that those who pay the most attention to the stock market earn the lowest returns – because their focus on the market causes them to trade more, and the more you trade, the more likely to buy and sell at the wrong times.
Are you sure you’re paying attention to everything you need to pay attention to?