Human beings aren’t cut out to be investors. Evolutionary instincts that serve us well most of the time let us down badly when we let them loose on our pension portfolios.
The harmful emotions that attract most attention are fear and greed, but another natural tendency that causes untold damage is over-confidence. Time and again, for whatever reason, we kid ourselves that we know far more about the global financial markets than we actually do. Or active investors assume that the “star” fund manager they put their faith in on the strength of an article in a Sunday newspaper is going to carry on outperforming for years to come.
I don’t say this with any smugness, but out of painful experience. Thankfully it’s a lesson I’ve learned as an investor. Alas, in another important area of my life – football fandom – I remain as hopelessly over-confident as ever, as my latest piece for ETF.com explains.
ROBIN POWELL is a freelance journalist and the founding editor of The Evidence-Based Investor. Based in Birmingham, England, he founded Ember Television and Regis Media, and he specialties in helping disruptive financial firms to grow. He also campaigns for a fair, transparent and sustainable investing industry. You can follow him on Twitter at @RobinJPowell.
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