A recent Gallup poll of investor preferences suggests we should be concerned—either about the state of the American education system, the reality of “recency bias” in investor psychology, or both.
The poll revealed that only 16% of Americans consider stocks the best long-term investment. In contrast, 37% selected real estate, which has ranked as the top choice in the Gallup poll every year since 2014, with 30% to 45% of respondents choosing it. Meanwhile, 23% believe gold is the best long-term investment, followed by 14% for CDs, 5% for bonds, and just 4% for cryptocurrency.
These findings are based on a Gallup survey conducted April 1–15, shortly after the Trump administration’s April 2 announcement of sweeping tariffs, which triggered sharp sell-offs in both stocks and bonds. Many Wall Street research firms have since increased the probability of a recession due to the uncertainty surrounding trade policy. Gold, often viewed as a safe haven during economic turmoil, has benefited from this sentiment—the SPDR Gold Shares ETF (GLD) is up 44% over the past 12 months, according to Morningstar.
Recency bias is a cognitive bias where investors give greater weight to recent events or short-term performance, assuming they are more likely to continue, while ignoring longer-term trends or historical data. In practical terms, this might lead an investor to:
• Chase recent market winners, assuming recent outperformance will persist.
• Panic-sell during a downturn, believing the losses will continue indefinitely.
• Ignore sound long-term strategies due to short-term market noise.
It often leads to poor decision-making, such as buying high and selling low.
However, long-term data consistently shows that stocks are, by far, the best-performing asset class and should be the cornerstone of every household’s wealth-building plan.
Being aware of cognitive biases like recency bias can lead to more rational, disciplined portfolio decisions over the long run.