Back to the Investment Basics Part 1: Why This Time Always Feels Different
By Leah Hadley, AFC®, CDFA®. Last updated September 2026.
Every year comes with a headline that convinces investors this time is different. Right now it might be inflation that refuses to settle, a war that has pushed oil prices around, or a Federal Reserve that just raised rates. Whatever is at the top of the news feels like the biggest risk anyone has ever faced, because it is the one in front of you.
That feeling has a name. It is called recency bias, and it is one of the most expensive habits an investor can have. This is Part 1 of our Back to the Investment Basics series, and we start here because the other four basics only work if you can keep today's headlines from hijacking your decisions.
The short answer. Recency bias is the tendency to give the most weight to whatever happened most recently. In investing, it pushes people to buy after a market has already risen and sell after it has already fallen. The best defense is context. Since the end of 2021, investors have lived through a 40-year high in inflation, a bank failure, a tariff shock, and a war, and a dollar invested in the S&P 500 at the end of 2021 would be worth about $1.72 today, including reinvested dividends. The news was loud the whole way. The plan is what did the work.
What Recency Bias Actually Is
Our memories give recent events more weight than older ones. In daily life, that is useful. If something dangerous just happened, you should pay attention to it.
Investing is different. Markets are not a place where the most recent event is the most important one. When you overweight what is loudest right now, you tend to chase whatever has been going up and run from whatever has been going down. You buy near the top of the excitement, and you sell near the bottom of the fear. Then you sit in cash, unsure when to get back in.
This is not a character flaw. It is how human memory works. It just happens to work against you in a market.
Five Years of “This Time Is Different”
The easiest way to loosen recency bias is to look at what was worrying people at the time. Here is the recent record, alongside what the S&P 500 did during each calendar year.
| Year | What worried investors | S&P 500 total return |
|---|---|---|
| 2022 | Inflation hit a 40-year high and the Fed raised rates at the fastest pace in decades. | -18.1% |
| 2023 | Silicon Valley Bank failed and a recession seemed certain to many forecasters. | 26.3% |
| 2024 | A contested election year and constant debate about when rates would come down. | 25.0% |
| 2025 | New tariffs set off a drop of roughly 10% over two days in early April, followed days later by the index’s biggest one-day gain since 2008. | 17.9% |
| 2026 (through Sept. 18) | A war with Iran pushed oil above $100 a barrel in March and left stocks roughly 9% below their January high. Inflation was still running 3.4% in August, and the Fed raised rates on September 16. | 12.7% so far |
Look at the pattern. The year with the most alarming inflation headlines was the only down year, and the two years after it were among the strongest. In 2025, the market dropped sharply and recovered so quickly that anyone who sold in early April locked in the loss and missed the rebound. In 2026, the worst headlines arrived in the spring, and the index is now up double digits for the year.
None of this means markets always recover quickly, or that they will this time. It means that in real time, the loudest news is a very poor guide to what comes next.
It Was Never Quiet
Go back further and the story repeats. In 2001, the September 11 attacks closed the markets for days and Enron collapsed. In 2008, the global financial crisis put the banking system itself in question. In 2011, one of the major rating agencies downgraded the United States from AAA for the first time. In 2020, a pandemic shut down economies around the world. Each one felt like the moment the old rules stopped working.
Markets did not stop working. They kept doing what they have always done, which is price in new information constantly, sometimes overreacting in both directions. Investors who stayed with a plan were there for the recoveries. Investors who let the headline of the day make the decision often were not.
Something is always going wrong somewhere. Remembering that does not make today’s problems smaller, but it does make them less surprising.
Three Ways to Push Back Against Recency Bias
- Write down your plan while you are calm. Note what you are investing for, when you will need the money, and what you will do if markets fall by 20 percent. A plan written in a quiet moment is much easier to follow in a noisy one.
- Name what you are reacting to. When you feel the urge to change something, ask whether you are responding to a change in your life or a change in the news. Only the first is a good reason to adjust a portfolio.
- Keep saving and rebalancing on schedule. Automatic contributions and periodic rebalancing take the decision out of your hands at exactly the moments when your judgment is least reliable.
Where This Series Goes Next
Looking past recent trends means leaning on a handful of investment basics that have held up through every one of those headlines. Over the next four posts, we cover five of them in order.
- You can’t invest if you haven’t saved.
- Markets are inspired by ingenuity, tempered by diversification.
- The price you pay matters.
- Patience is a virtue.
- Investing is personal.
This series is built for anyone who wants a solid foundation. If you have already accumulated significant assets and want to go deeper on the behavior and portfolio side, our overview of the three principles of sound investing picks up from there.
Frequently Asked Questions
What is recency bias in investing?
Recency bias is the habit of giving too much weight to recent events when making decisions. For investors, it shows up as buying what has just performed well and selling what has just fallen, because the recent past feels like a prediction of the near future. It usually is not.
Should I sell my investments when the news gets scary?
Not because of the news alone. Selling makes sense when your goals, timeline, or need for cash have changed. Selling because of a headline usually means locking in a loss and then having to decide when to get back in, which is the harder decision of the two.
Is this time really different from past market scares?
The details are always different. The pattern rarely is. Every era has a threat that seems new and unprecedented, and markets have repeatedly absorbed inflation spikes, wars, banking stress, and recessions. That does not mean every decline recovers quickly. It means a plan built for uncertainty holds up better than a reaction to the latest headline.
What should I do with new money when markets feel unstable?
If you will not need it for a decade or more, continuing to invest on a regular schedule is one of the most practical ways to work through volatility, because it does not depend on guessing the right moment. Money you will need in the next few years belongs in more stable holdings, which we cover in Part 5.
How can I tell whether a change to my portfolio is a good idea?
Ask whether the change is driven by your plan or by the last few weeks of news. Reasons like a new goal, a shorter timeline, or a portfolio that has drifted from its target are plan-driven. A frightening headline is not.
Want Help Keeping the Headlines in Perspective?
A written plan is the best protection against recency bias. Our team can help you build one, and stay with you when the news gets loud.
Intentional Wealth Partners provides comprehensive financial planning and wealth management, including investment management, risk analysis, debt management, tax planning, career planning, and retirement planning. We are based in Cleveland, Ohio, and work with clients virtually nationwide.
Learn more about how we work, or schedule a complimentary consultation to see if we’re a good fit.
Related reading. Why Consistency Beats Market Timing and 6 Investor Tips for Handling Wild Market Swings
This article is general education and is not investment advice. Past performance does not guarantee future results. Index returns are shown for illustrative purposes only, include reinvested dividends, and do not reflect fees, expenses, or taxes. Indices are unmanaged and not available for direct investment. Sources: S&P 500 total returns per S&P Dow Jones Indices data (2026 figure through September 18, 2026); U.S. Bureau of Labor Statistics CPI release for August 2026. Every situation is different, so talk with a qualified professional before making decisions about your finances.
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Leah Hadley, AFCĀ®, CDFAĀ®, MAFFĀ®
Founder/Senior Wealth Manager
Leah Hadley is the founder of Intentional Wealth Partners and Intentional Divorce Solutions, sister companies based in Cleveland and serving clients nationwide. Intentional Wealth Partners provides financial planning and wealth management. She specializes in helping women and couples navigate major life transitions with confidence and clarity. She is also the author of Intentional Money: The Modern Woman's Guide to Building Wealth, Purpose, and Peace, host of the "Intentional Divorce Insights" podcast, and a sought-after speaker.
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