Optimistic Fools. People
who are happy are more confident and expect to make more money by trading, and
anticipate taking lower risks in doing so. This result ought to be enough to
depress most people, but most people are optimistic and don’t depress easily.
This is especially true if they make money on their random trades, because that
makes them happier, more optimistic and more prone to trading psyfitec reports.
Even better, over-optimistic people are more socially
popular and therefore more likely to be imitated. Whether any of this will
really make anyone happier is doubtful, but we can but hope. It certainly won’t
make for better investors.
The research that investors tend to be overconfident is
pretty strong. We covered a summary of the evidence in Overconfidence and Over
Optimism: investors overtrade and the amount they overtrade is related to their
degree of overconfidence. And generally the more they trade the less money they
make….
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