Availability bias

Availability bias is the tendency to judge how likely or important something is based on how easily examples come to mind, rather than on actual data. Vivid, dramatic, or recent events are far easier to recall than routine ones, which makes them feel more probable or significant than they really are.

In investing, this shows up when an investor overweights the risk of a market crash right after living through one, or avoids an entire industry because of one company's dramatic failure that got heavy media coverage. The crash or the failure is genuinely memorable, but that vividness does not mean it is a representative guide to the actual odds of it happening again, or to how a completely different company in the same industry will perform.

Financial media makes availability bias worse, since news naturally covers dramatic, unusual events far more than the slow, uneventful compounding that describes most of what happens in markets most of the time. An investor working against this bias tries to separate how memorable a risk feels from how likely it actually is, checking historical data across many years and base rates rather than relying on whatever recent headline comes to mind first.