Join our community of smart investors

When average becomes good

The effect is always the same. I just say the words, “it’s the availability heuristic” and their eyes glaze over. What might have been a halfway intelligent conversation about the western world’s response to Covid-19 is over. Mentally, they’ve gone. Quite likely, you’re about to do the same, to turn the page or click on a link. You hear the phrase, ‘availability heuristic’ – laden with the threat to make a listener think and, worse, to quantify – and you want to escape.

Yet the availability heuristic is really important and, actually, if you are a serious investor, you should know about it anyway. It explains much about the way people behave; in particular, how they respond to uncertainty, such as the future path of the stock market or the course of a virus through a susceptible population.

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in