Shotguns and Phantasms
We hear, frequently, about how important “confidence” is for markets. Clearly this is true: when people are confident in the future they make investments and when they’re not they hunker down under the bed with a stash of cash and a shotgun.
Unfortunately confidence is a self-fulfilling prophesy and we are, it seems, particularly prone to living out our fantasies, no matter how stupid they may seem in retrospect. You see, confidence is a psychological trick of the mind, a phantasm evolved to lure us into unwise investments, as wicked a behavioural bias as you’ll find in a long list of the usual suspects.
We hear, frequently, about how important “confidence” is for markets. Clearly this is true: when people are confident in the future they make investments and when they’re not they hunker down under the bed with a stash of cash and a shotgun.
Unfortunately confidence is a self-fulfilling prophesy and we are, it seems, particularly prone to living out our fantasies, no matter how stupid they may seem in retrospect. You see, confidence is a psychological trick of the mind, a phantasm evolved to lure us into unwise investments, as wicked a behavioural bias as you’ll find in a long list of the usual suspects.
