A Global Warming “Bubble”?

by Alton C. Thompson / July 31st, 2017

In this article Harry S. Dent, Jr. states that:

Despite mountains of evidence and historical proof that bubbles inflate and burst all the time . . . we somehow can’t seem to see bubbles when we’re in one.

In behavioral finance, they call this phenomenon the “status quo bias” and it’s just one of the many cognitive biases that makes people naturally bad investors.

You see, most people are awful at predicting the future because they think reality moves in a straight line. That is, they take where they are right now in time and just project out into the future from there.

Gene Epstein, of Barron’s, has referred to Dent’s predictions as “dented” (!), and I have no reason to question Epstein’s assertion.  What caught my eye in Dent’s article, however, was his reference to “status quo bias”—a term that I had not encountered before.  That encounter led me to do a Google search of the term, which resulted in me finding this article, along with this article, which addressed the question of how “powerful” the bias is.  Here are the two concluding paragraphs of the latter article:

When military members are considering their choices as their contract comes to an end, many consider re-enlisting simply because they are unaware of the many opportunities that exist for them.  Even when we understand our current path is no longer beneficial or no longer makes us happy, we must still overcome the…

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