Author: Donald Latumahina / Source: Life Optimizer
I recently read the book summary of Big Mistakes by Michael Batnick. The book has an interesting subtitle: The Best Investors and Their Worst Investments. Interesting combination, isn’t it? It contains story after story of how very smart people made bad decisions in investing.
But how could that happen? How could these smart people make bad decisions?
In essence, what happened was that they failed to manage their risks. They didn’t prepare themselves for the worst things that could happen. They were overconfident, thinking that good times would last forever. So, when the opposite happened, they lost a lot and sometimes everything.
It reminds me of a story that I wrote about in The Danger of Overconfidence:
Robert Shiller told the story of Irving Fisher – a Yale professor in the early 20th century – who said that the stock market in 1929 was in “permanently…
The post Why Smart People Make Bad Decisions appeared first on FeedBox.