Investors often have a bias towards action, driven by an evolutionary impulse that associates inactivity with danger. This tendency is evident in financial markets, where investors are urged to respond to every event. However, events typically bear less consequence than anticipated. For example, studies show that traders overpay for put options, expecting drastic market movements that seldom occur. Similarly, horse racing research reveals that improbable outcomes are often overbet, while more likely outcomes are undervalued. Such patterns suggest that prediction markets and trading behavior reflect an exaggerated optimism for extraordinary events. Notably, focusing on what is unlikely to change, as highlighted by Jeff Bezos, can guide investors better than reacting to potential changes. He suggests that thinking about stability leads to more robust business strategies. Therefore, investors should consider betting against common predictions about future market changes, as the evidence shows that stability often prevails despite dramatic headlines.

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