By Tom Bradley

So far, it’s been a crappy summer in southern Ontario – cool, rainy and unpredictable. I recently finished two weeks at Crystal Lake, so I experienced it firsthand.

Near the end of the holiday, I had two people say to me that we need to get used to this type of weather. Going forward, this is going to be summer in Ontario cottage country. 2014 will be a typical year.

Now, I’m pretty sure there wasn’t any meteorological reasoning behind the comments, but rather an extrapolation of what’s been happening for what seems like forever, sprinkled with a bit of frustration. In investing, we refer to this as the recency effect – what has been going on in recent weeks, months and quarters is projected to go on in the future.

Not surprisingly, this short-term extrapolation for your portfolio is about as sound as planning future summer activities based on the weather of the last month. Unfortunately, it happens all the time and indeed, today it’s being talked about almost as much as the weather – “The market’s been doing well this year. It seems like the outlook is pretty good.”

Don’t get caught up making long-term decisions based on short-term trends and fads. It’s a poor way to plan your vacation and an even poorer way to invest.