Impossible to avoid, the news bombards us with data that makes us want to act. The majority of news is negative, the majority of the time. Negativity causes fear, and fear causes our fast-thinking brains moving. We enter fight/flight mode quickly. We want to act quickly—and that is often an expensive mistake, when it comes to our investments.
What we see is what is important. This fallacy is called availability bias, and like many of the key heuristics, it is a deeply rooted, instinctual survival technique. The fast-acting brain says, “I see danger! Fight!” or “Run!” Part of us is always looking out for danger—again, helpful in the jungle, dangerous in investing.