We humans love to rewrite history. Ask anyone today about Amazon, and they’ll tell you it was “obviously going to be huge.” Really? In the late ’90s, plenty of analysts thought it was just a glorified online bookstore destined to collapse when the dot-com bubble popped.
That’s the Hindsight Halo — the glow we give to past winners, convincing ourselves they were inevitable all along. It’s a comforting illusion. It makes us feel like the market is a puzzle we’ve already solved.
But halos blind. They trick us into believing that spotting the next Amazon, the next Apple, the next Bitcoin is simply about “trusting our gut.” What we forget is that at the time, the path wasn’t obvious at all. Amazon lost money for years. Apple almost went bankrupt in the ’90s. Bitcoin was laughed off as play money.
Investing isn’t about spotting inevitabilities — it’s about living in uncertainty and making calculated bets when everyone else is still rolling their eyes.
Here’s the trap of the Hindsight Halo:
- It overstates our skill. We think we “knew it all along,” but really, we’re remembering selectively. Psychologists call this hindsight bias.
- It makes us overconfident in the present. If yesterday’s winner “was obvious,” then surely today’s pick will be too. Spoiler: it won’t.
- It erases the losers. For every Amazon, there were dozens of Pets.coms. For every Bitcoin, hundreds of altcoins are buried in forgotten exchanges.
👉 Practical takeaway: Instead of asking, “What will be the next Amazon?” ask, “What looks uncertain today, but has asymmetric potential if I’m right?” That mindset won’t guarantee halos, but it puts you closer to catching them before they glow.
🔗 For context: The Dot-Com Bubble Explained — Investopedia
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