Momentum Bias: Transcend The Trend

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Executive Summary

Humans have an almost innate tendency to identify recent trends and subconsciously project them into the future. Whether playing sports, investing in the markets, or picking someone up at a bar, we oftentimes cannot help but feel we have a 'hot hand', or, conversely, believe that we have lost our touch and that the world is against us. The key risk here is momentum bias: becoming overconfident or selling ourselves short based on recent trends.

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