ISMS 8: Larry Swedroe – Are You Overconfident in Your Skills?

<p>In this episode of Investment Strategy Made Simple (ISMS), Andrew and Larry discuss a chapter of Larry’s book <em>Investment Mistakes Even Smart Investors Make and How to Avoid Them</em>. In this first series of many, they talk about mistake number one: Are you overconfident in your skills?</p><p><strong>LEARNING: </strong>Don’t be overconfident. Look for value-added information when researching an investment.</p><p>&nbsp;</p><blockquote class="ql-align-center"><strong>“When you trade, understand that you’re competing against the market’s collective wisdom.”</strong></blockquote><blockquote class="ql-align-center">Larry Swedroe</blockquote><p>&nbsp;</p><p>In today’s episode, Andrew chats with Larry Swedroe, head of financial and economic research at <a href="https://buckinghamwealthpartners.com/" rel="noopener noreferrer" target="_blank">Buckingham Wealth Partners</a>. You can learn more about Larry’s Worst Investment Ever story on <a href="https://myworstinvestmentever.com/ep645-larry-swedroe-beware-of-idiosyncratic-risks/" rel="noopener noreferrer" target="_blank">Ep645: Beware of Idiosyncratic Risks</a>.</p><p>Larry deeply understands the world of academic research and investing, especially risk. Today Andrew and Larry discuss a chapter of Larry’s book <a href="https://amzn.to/3J5ZHz4" rel="noopener noreferrer" target="_blank"><em>Investment Mistakes Even Smart Investors Make and How to Avoid Them</em></a>. In this first series of many, they talk about mistake number one: Are you overconfident in your skills?</p><h2>The majority of people are naturally overconfident</h2><p>There’s a lot of research showing that human beings tend to be overconfident in their skills. If you ask people, are you liked by others more than the average person? Are you a better lover than the average person? Can you drive better than the average person? It doesn’t matter what the question is; the answer from a vast majority is that they think they’re better than the average person. According to Larry, this is actually a good health