So Easy to Be Fooled
How is it possible that the advisor and the client we discussed earlier could have been made to feel comfortable in choosing a payout of 8.5 percent or even 6 percent? Is it possible that we can be fooled, too? Sure, because our experiences of the recent past can substantially influence our judgments and create a bias that is too optimistic. Following this thought further, I wondered whether the average annual return for the ten-year period just prior to 1968 could have influenced an advisor’s projections (more…)
