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We’ve all been there. You open up a trading app, pull up a stock, and see that beautiful, climbing green line. It’s easy to look at that upward trajectory and assume the momentum will simply carry you into the future.

But there is a fundamental trap in how we read these visuals. When you look at a chart, you aren’t looking at a live engine; you are looking at “finished business”.

The Mirage of Extrapolation

Most investors see a steady trend and instinctively extrapolate. They think, “If it went from $50$ to $100$ like this, it’ll go to $150$ the same way”. However, that chart is merely a record of returns that have already been delivered to someone else.

The past is a finished chapter. To figure out if there’s a sequel, you have to look deeper than the line itself.

We discussed this as part of our Global Financial Education Sessions. Want to join our next session?