The belief that past independent events influence future independent events. After five losing bets, the next bet is not "due" to win. Each event is statistically independent. The coin has no memory. The market has no memory. Your losing streak has no predictive power over the next outcome.
Losses feel approximately twice as painful as equivalent gains feel pleasant. This asymmetry causes rational investors to make irrational decisions: cutting winners too early, holding losers too long, and abandoning sound strategies during normal drawdowns.
Judging the quality of a decision by its outcome rather than the process used to make it. A correct decision that produces a bad outcome is still a correct decision. An incorrect decision that produces a good outcome is still incorrect.
Overweighting recent events when forming expectations. After a winning run, confidence inflates. After a losing run, confidence collapses — the strategy gets abandoned exactly when it should be trusted most.
Seeking information that confirms existing beliefs while ignoring contradictory evidence. The antidote is structured pre-mortems: before placing a bet, build the strongest possible case against it.