Investors look for patterns that don't exist

Perhaps you never believed in the man on the moon. But you may well have thought, at some stage, that you saw the shape of an animal in a cloud. Or perhaps it was a face you saw in a vegetable, a piece of fruit or a slice of toast?

All of these are examples of a psychological phenomenon called pareidolia. It refers to our tendency to perceive recognisable patterns in random or ambiguous visual stimuli.

The human brain is wired to recognise familiar objects and shapes, particularly faces. Even when there's only minimal information suggesting a face or form, people still see it clearly.

Pareidolia was once considered to be a symptom of psychosis. It’s now generally recognised as a common part of the human experience and indeed, as an evolutionary adaption that’s central to our ability to learn.

For our ancestors, pareidolia was vital for survival. It meant they could recognise friends and foes quickly. It also helped them to communicate, to hunt, and to develop tools and cognitive skills.

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