By: KaSh, Writer/ Analyst

Darshit had always been the smartest kid among his peers at school. He was known for solving problems that left even his teachers thinking.

That’s why the test result shocked him.

A 9 out of 10 felt like a heartbreak for someone used to perfection. He was confident he had done everything right.

In the multiple-choice section, he had selected:

B, B, B, B, B, B, B, B, B, C

He was certain his answers were correct.

Confused and disappointed, he approached his teacher. The teacher smiled and asked:

'Why did you choose C for the last question?'

Darshit replied honestly.
'For the first eight questions, i confidently picked B. For ninth one i picked B initially but i grew suspicious. The probability of the same option being correct every time felt too low.'

The teacher smiled again- this time knowingly.

Now, consider a situation that may feel more familiar.

You buy a stock.
The price drops the next day.
It drops again the day after.

By the fifth day, you convince yourself that the market owes you a correction. Surely, after so many losses, it must bounce back.

Instead, the stock falls even further.

Worried, you sell off your stocks to limit the damage.

Two years later, a friend who invested in the same stock at the same time tells you how it turned into a fortune.

What you experienced is the disappointment that follows the elevated expectations as a result of what is known as Gambler's Fallacy.

The gambler’s fallacy is the belief that a streak of outcomes must soon reverse to restore balance. It’s common not just among gamblers, but also among investors, analysts, and even students.

The confusion usually arises from misunderstanding the difference between independent events and the law of large numbers.

In a small window, independent events have no memory.
A previous outcome does not influence the next one.

A coin that has landed heads five times in a row is not 'due' for tails.

Over a very large number of trials, outcomes may appear balanced- but only statistically, and only over time. In the short run, randomness has no obligation to behave neatly.

Darshit had fallen into the same trap.

By assuming that a long streak of identical answers must be wrong, he ignored the independence of each question. The teacher’s lesson stayed with him.

A streak does not imply correction.
Patterns do not guarantee balance.

Understanding this distinction is critical- whether you are solving an exam, analyzing markets, or interpreting data.

KaSh

Jan 22, 2026