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Is the Market 'Due' for a Downturn?

Maybe. Maybe not. Just don’t fall prey to the Gambler’s Fallacy.

Sarah Newcomb 12 December, 2019 | 17:17

The U.S. stock market has been growing for more than a decade. Is it due for a prolonged downturn? I won't speculate on that, but I will say that a lot of people seem to be falling prey to the Gambler's Fallacy when discussing the market today.

Fallacy: A false or mistaken idea (Merriam Webster)

The Gambler's Fallacy is what we call that gut feeling that tells you it's just time for a trend to reverse, even when there is no fundamental evidence to support it. One clear way to illustrate the Gambler's Fallacy is using a roulette wheel.

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About Author

Sarah Newcomb

Sarah Newcomb  Sarah Newcomb is a behavioral economist with Morningstar.

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