Conviction regarding decisions made, assets owned, or theses being managed is generally viewed as positive. Yet it is not easy to distinguish well-reasoned conviction from mere bluster. Chief among the biases that can nudge professional managers and analysts towards the latter is overconfidence.
Overconfidence can cause investors to be blinded when assessing their actions. It can cause premature dismissal, confirmation bias, and hindsight bias which in turn, can hurt an investor’s performance while trading.
This essay examines the impact of overconfidence on investment decision-making and how to be aware of it when it occurs. It then provides advice that can be employed to reign it in and make deliberate improvements.
Complete the form to download your copy of our white paper on Overcoming Overconfidence.