Our brain is wired to look for patterns and clues. We live in an information overloaded world and get tricked by what’s easily available.
Behavioural economists defined the term ‘Availability heuristic’ to explain why some information is highly salient in our mind and why some is neglected or never explored further.
Proximate causes are prevalent in all aspects of our life. However, these play a dominant role in the field of investing.
While researching about a business and ultimate causes of its performance, we get influenced by its share price gyration, theme of the sector its operating in, macro-economic conditions etc.
While the proximate causes may play a role in the short term or some of the times, but, its the ultimate causes that we must give our attention to.
Thinking Space 