As part of its service, Marketocracy provides its mock-fund managers with archived Web pages showing the funds' composition as of a certain day. Perhaps unfortunately, we don't have that same capacity in our own heads. We can't shift our memories to a specific point in time and recall our mental state at that time. We can't fully recall what options we weighed at the time of an earlier decision, let alone our intuitive and emotional states as of then. We even find it difficult to untangle "should" and "could" when re-assessing a previous decision. The question, "I should have done X in retrospect, but could I have at the time?" is a very difficult one to answer.
Instead of reliable archives, nature has given us egos. There's a certain blessedness in that, as we can really cut ourselves down by should-ing ourselves over decisions made without the benefit of later hindsight. Unfortunately, our ego strength also opens us up to a certain bias.
According to Wikipedia, "choice-supportive bias is a tendency to retroactively ascribe positive attributes to an option one has selected [because one has selected it]." As we commit to a decision, we begin to mix in hindsight in a self-justifying way. "I bought stock ABC because I thought it was undervalued" becomes "I legged in to ABC because I thought it was undervalued but wasn't sure it'd be even more of a bargain" to "I'm dollar-cost averaging. ABC is a long-term winner." It's not hard to see how choice-supportive bias amplifies illusion-of-control bias.
On the Street, the most known kind of choice-supportive bias is encapsulated in an old maxim: "A 'long-term investment' is a speculation that didn't work out." As the above example indicates, room could be made for "'Legging-in' means busting your allocation model."
There's no easy way to get around choice-supportive bias, as it does tend to go with a healthy ego. Detail-oriented people have the option of keeping a detail-rich trading diary, and letting it serve as a memory-substitute. Unfortunately, this countering places a premium on making decisions verbosely. Many decisions are based on intuition; as intuition is honed, unverbalized reasons accompany verbalized ones. Few people - and far fewer action-oriented people - have the introspective skill to tease out explicit reasons from their intuitions.
The best way to minimize it is combining a trading diary with cultivating the skill of self-honesty. It's a tricky skill beause we're often prone to confuse self-honesty with being hard on ourselves. Castigating yourself for not seeing a March earnings disappointment in February does tend to cross that line. Some people take up technical analysis in consequence.
On the other hand: if a competent and reasonable stock picker would have foreseen a defect at the time, then there is grounds for self-criticism. Choice-supportive bias does tend to erase legitimate self-improvement opportunities. As noted above, though, minimizing choice-supportive bias also requires minimizing both varieties of hindsight bias: the self-justifying kind, and the self-castigating kind.