Memory has a profound influence on our lives. As we discussed in Chapter 4, there are strong reasons that we remember some things and forget others. We also discussed the role of context in determining both what we encode into memory and what we retrieve later. Memory can influence us on a regular basis in investment analysis. We pick up on particular cues in the current context. These remind us of situations and dynamics that we have seen before. At the same time, we may become blind to important information that is simply less emotional, less obvious, or less familiar. This selective information processing captures some important behavioral biases. Some of these biases can be helpful, but they can also force us into ...
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