Mumbai Rains, Airplane Crashes, Stock Market Injassing: How Recency Bias Destroys Wealth

When Mumbai witnessed one of the toughest rainfall in more than a century earlier last week, many residents started to bring floods the next day. Once a plane crashes once a year, passengers avoid for months – some even clambering to pay extra for “safer” window seats.

In investing, the same fall appears: investors treat the most recent event, no matter how rare, as if it were fate. This is called recent bias and subtle but destructive force in decision-making.

What is recent bias?

Recent bias is the tendency to believe that what has just happened will continue to happen. We are overweight the last event and ignore them long -term patterns. Ironically, it is often the rare, exceptional events – not the recurring – that dominate our judgment.

Daily examples of Rentheidsbias

Take the tragic Air India crash earlier this year. Only one passenger, sitting at 11a, survived. Suddenly 11a -seat of the aircraft was seen as the “safest”, with the demand that increases – despite the statistical absurdity.

Or consider 19 August 2025, when Mumbai and nearby districts recorded record -breaking rainfall. Although heaven cleaned up the next day, many skipped the work, afraid of another flood on the map. Both are rare events. Yet they were behavior for many years of safe flights or thousands of dry monsoons.

Markets: where fear meets greed

Recentment appears daily in markets.

* After a sharp fall, investors fear an endless crash.

* After a rally, they expect that shares “double every month”.

This bias feeds both panic and euphoria and blinds investors to the cyclical reality of markets.

History offers countless memories: the IT bubble of 2000, the Global Financial Crisis (GFC) of 2008 and the COVID-19-Crash of 2020. Every activated massive panic sale. Each was not only followed by recovery, but by new highlights. Those who admit to recent bias that were locked up below – the abuse of the wealth created in the recovery.

The effect of the value destruction

When investors let decisions drive noise in the short term, wealth is quietly destroyed:

* Sell quality supplies in fear.

* Pay too much for Momentum during euphoria.

* Missing the composite power of being invested.

* The problem is rarely with the poor companies. It’s bad behavior.

The effect of the value creation

Investors who resist user resistance will have a powerful lead. She:

* Buy when panic grabs the market.

* Keep through temporary volatility.

* Anchor on Fundamentals, no headlines.

As the saying is: “Markets are often bad news at the bottom.”

For example, when American rates were announced in April this year, Nifty hit its low point for 2025. It has not broken that level since then – we mentions that panic often coincides with opportunities.

Practical ways to overcome recycling bias

* Look at 10-year graphs, no 10-day movements.

* Basic decisions on Fundamentals and Valuation, no noise.

* Use a checklist-driven process to prevent impulsive reactions.

* Always separate signal from noise.

Conclusion

Markets will always swing between disasters and euphoria – but neither is permanent. Wealth is not built by responding to the newest head, but by resisting the conviction that the recent past predicts the future.

Recent bias is of course, but it blows us to the larger whole. Markets move in cycles, no straight lines. One crash – or one rally – never defines the long term.

When investing, the biggest lead is not access to more information, but the ability to stay rational when others cannot.

Happy invest. !!!!.

The author, Jimeet Modi, is the founder and CEO, Samco Group.