The Forer effect refers to the tendency for people to accept generic personal feedback consisting of relatively trivial statements with a high base rate, as being highly accurate (Tobacyk & Milford, 1988).
In 1949, Bertram R. Forer published the results of an experiment he conducted on the fallacy of personal validation (Forer, 1949). He was able to convince the vast majority of his 39 psychology student participants that a generic personality profile (most of which was taken from a newsstand astrology book) was written specifically for them. This effect (or a variation of it) that goes by many names including the Barnum effect, subjective validation, and personal validation effect, has been empirically demonstrated numerous times since Forer's 1949 experiment.
This effect is strongly associated with paranormal beliefs in a bi-directional relationship where in one direction, those who profess having paranormal powers (e.g., astrologers, clairvoyants, faith healers, fortune tellers, graphologists, mediums, Tarot Card readers, and others) exploit this effect to gain more believers in their "powers." In the other direction, those who tend to believe in the paranormal (specifically, spiritualism) are significantly more likely to fall victim to the Forer effect (Tobacyk & Milford, 1988). This creates a feedback loop of increasing gullibility.
Example #1: This effect is what makes cold reading possible. One skilled at cold reading knows how to read body language and facial expressions while making generic statements or statements that are statistically likely to apply to the person having the reading. Because of the confirmation bias, people who tend to believe in the powers of the one giving the reading tend to remember the hits and forget the misses, resulting in a perceptually remarkable but completely explainable experience.
Example #2: You are facing a very important decision in your life—whether or not to take a job as the VP of marketing for a big software firm. You ask the universe to give you a sign pointing you in the right direction. After a couple of days, you are reading a magazine and you see an ad for the software firm. You take this as a sign to accept the job.
This is an example of subjective validation—seeing two unrelated events (i.e., a coincidence) as being related in meaning due to one's existing beliefs or preferences, conscious or unconscious.
Example #3: Fortune cookies.
Example #4: Bible verses.
Example #5: Horoscopes.