Test yourself for investing overconfidence

Investors with an “overconfidence” bias often trade too much and manage their portfolio on a stock-by-stock basis—while assuming they can beat the market, which the University of Chicago’s Mr. Thaler says probably won’t happen.

Mr. Thaler recommends a little test for the presence of an overconfidence bias. “Write down 10 traits [such as ‘investment skill’ or ‘ability to make good stock picks’], then ask yourself how you rate compared to your co-workers. If you rate yourself above average on all of them, plead guilty,” he says.

From the Wall Street Journal

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  • http://www.wikinancial.com wikinancial

    I uesd to have a huge problem with being ‘overconfident’ while trading and that’s definitely a losing approach to this market. Learn from your mistakes, or rather, mine.