Clustering illusion
The tendency to see meaning in clusters that randomness produces on its own. Random events don't arrive evenly spaced; they bunch up and leave gaps.
In plain English
If events happen at random at an average rate, some will arrive close together and some periods will be empty. People expect randomness to look tidy, so the bunches look like a curse and the gaps like a lucky spell. To check, fix the time window and the definition in advance and compare with what chance alone would produce.
Uncle Gary explains
If household mishaps happen at random about once a fortnight, there's an 82% chance of three of them in a single week at some point in the year. Uncle Gary calls this a rule.
Why it matters for your money
A run of losing trades or good days can be pure chance. Before changing a strategy because of a streak, compare it with how often such streaks happen at random.
Where we tested it
Related terms
All glossary terms. Educational content, not financial advice.