This is part 7 of 8 blogs on what today's smart investors need to know in order to create sustainable wealth for you and your family.
Our ancient ancestors needed to be overconfident in order to survive because life was short and food was scarce. That served them well then but today, it can cause us costly investment mistakes. Because overconfident investors often forget past mistakes yet always remember past successes.
Remember the bull market of the 90's. It was almost impossible to have not made money in the stock market, especially the technology sector. Investors got overconfident and thought they were geniuses. Many shifted all of their stock portfolio to tech stocks and then got burned when that sector tanked in early 2000.
Also, investors may invest heavily in their own employer stock because they think they have insider knowledge of the company. Think Enron!
To create true wealth and avoid being overconfident, investors must be non-emotional and disciplined investors. Having a little humility helps.
Bottom line: Don't make the mistake of being overconfident in your investing skills.
