The Problem With Positive Thinking

Over on the consistently excellent Abnormal Returns, Tadas Viskanta has posted an excerpt from my new book, Investing Psychology: The Effects of Behavioral Finance on Investment Choice and Bias (Wiley Finance):

Okay, so we now know that while we can trust our senses to help us determine the future trajectory of a ball we can't trust them to help us predict the future trajectory of stocks. But we can deal with that, because we're smart, right?

In fact, we know we're smarter than the average investor, so we can be pretty sure that we will make money on the markets. After all, if we didn't think we were going to make money on the markets we wouldn't be investing, would we?

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