Gambler’s Fallacy (explained in a minutes) – Behavioral Finance

The Gambler’s Fallacy is the mistaken belief that past random events affect future ones. For example, if a coin lands heads up 20 times, it’s wrongly assumed that tails are due next, despite each flip having a 50% chance. This fallacy applies beyond gambling, like in investing, where decisions should be based on fundamental analysis, not past trends, as each event is independent and the past doesn’t influence future probabilities.