hindsight
Hindsight bias
The rule
Once you know how it turned out, the mind rewrites the past as if it was always obvious, erasing the real doubt that existed before. Like saying you 'always knew' the match result after the final over.
Where it flips
But sometimes an outcome truly teaches that a risk was overrated, so not every 'I should have seen it' is bias. The line is whether a note from that time backs the claim, or whether the outcome alone is doing the talking.
Fischhoff showed that telling people how something ended made them believe they had 'known it all along'. They raised their remembered guess about a result they were actually unsure of before. The outcome quietly edits the memory of the doubt. So a choice that was truly a coin-toss later feels like it was clearly right or clearly silly. For an investor this poisons learning. After a stock doubles, the signs look obvious, and you feel proud or hard on yourself about a call that was murky at the time. The only real defence is a dated note written before the outcome, because it keeps what you actually knew and guessed. Without that note, every review is judged against a past the mind has already tidied up.
A worked example
A stock doubles after an approval that was a real coin-toss beforehand. The reader now says the approval was 'obviously coming' and blames themselves for buying too little, forgetting the note they never wrote listing rejection as a real risk. [illustrative]
How to spot it
- ·a past uncertain call described as having been obvious
- ·self-praise or self-blame that rests only on how it turned out
- ·no dated note from before the outcome to check the memory against
Baruch Fischhoff · Hindsight is not equal to foresight (1975)