Recency bias

Over-weighting recent experience when estimating the future.

It is why investors extrapolate the last three years of returns, why risk feels low after a calm period, and why a sector that has just performed well attracts capital at precisely the wrong point.

The countermeasure is data over a long period. A ten-year series of a company's returns on capital, or of a sector's margins, is immune to what happened last quarter.

Look further back than feels necessary.