Investors know bull markets end, of course.
But even the global leaders descending on Davos may underestimate the dangers. Long-term investment success requires us to be fearful when the majority is complacent. This is one of those times.
In the 2025 edition of the WEF’s annual Global Risks Report (the 2026 report is due soon), participants placed “asset bubble burst” in 19th place in a ranking of global risks deemed “most likely to present a material crisis on a global scale” last year.
Recency bias is defined as “a cognitive bias that favors recent events over historic ones. … [R]ecency bias gives greater importance to the most recent event.”
There is no easy antidote to recency bias. Becoming a student of financial-market history is helpful, though probably not enough to overcome recency bias.
More important is having lived through a bursting bubble, or at least suffering through a severe and protracted bear market.
Edward McQuarrie, a professor emeritus at Santa Clara University, and William Bernstein of Efficient Frontiers have written that
“there’s a difference … between being told that markets can fall by more than 50% and having it burned into your memory banks by seeing your net worth halved in real time as the economy careens toward the precipice.”
When this bull market does finally come to an end, you will be glad to have that knowledge on your side.
Mark Hulbert MarketWatch Jan. 14, 2026
Kommentarer