Hello, The article is long, so I will post it partly. Representativeness Bias: The Basics: Itâs common for every person to process new information, new phenomenon or some new idea through their past knowledge or experience. Many investors tend to evaluate the probabilities based on some past experience and they consider some company to be a good investment if it has performed well during some period in the past. Usually, it is the period, which is close to the present. Among many traders and investors, who are familiar to me, good past performance is a bullish sign. Thatâs clearly erroneous, leads to serious investment mistakes and thus to significant losses, instead of wishful profit. Also, when investor tries to classify some company and when it doesnât suit to any of his categories, he tries to apply it to the category he thinks it best suits to, while it may really suit, BUT just PARTLY. Such investment mistake can drive to erroneous valuation and risk analysis. Test: 1. Have you ever experienced a feeling of a strong wish to buy stock when you saw strong past performance? 2. If you have ever analyzed a stock analystâs track record (and if he was successful), then did you decide to follow his recommendations? If your answer is âyesâ to both questions, then you are really susceptible to representativeness bias.