opinion

Without looking, what was your portfolio return last year? Don’t check your statement – just answer. Next, visualize what the market performance looked like over the past five or 10 years. Now look it up and compare it with what you conjured up in your mind.

Aside from professional money managers, most people will find they were way off. And while we intuitively know that our memories about past performance are not like an accounting ledger, it might still surprise us to learn just how distorted our recollection of past returns and market patterns truly are.

The problem with this, according to a paper just published in The Quarterly Journal of Economics, is that these inaccurate memories about past returns fuel expectations about future market performance and in turn, influenc

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