{"id":1994721,"date":"2014-06-19T10:59:10","date_gmt":"2014-06-19T05:29:10","guid":{"rendered":"http:\/\/stockviz.biz\/index.php\/?p=1994721"},"modified":"2014-09-09T12:01:43","modified_gmt":"2014-09-09T06:31:43","slug":"ego-single-biggest-impediment-successful-investing","status":"publish","type":"post","link":"https:\/\/stockviz.biz\/index.php\/2014\/06\/19\/ego-single-biggest-impediment-successful-investing\/","title":{"rendered":"Ego: The Single Biggest Impediment to Successful Investing"},"content":{"rendered":"<h3><\/h3>\n<p>From <em>Why Inexperienced Investors Do Not Learn: They Do Not Know Their Past Portfolio Performance (Glaser, Weber)<\/em><\/p>\n<div class=\"row-fluid well well-small\">\nA necessary condition to learn is that investors actually know what happened in the past and that the views of the past are not biased. Investors are hardly able to give a correct estimate of their own past realized stock portfolio performance. People overrate themselves. On average, investors think, that they are better than others.\n<\/div>\n<p>Here&#8217;s a telling chart on what investors &#8220;thought&#8221; they made vs what they actually made:<\/p>\n<p><a target=\"_blank\" href=\"http:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2014\/06\/realized-vs-estimated-returns.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2014\/06\/realized-vs-estimated-returns.png\" alt=\"realized vs estimated returns\" width=\"775\" height=\"472\" class=\"alignnone size-full wp-image-1994731\" srcset=\"https:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2014\/06\/realized-vs-estimated-returns.png 775w, https:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2014\/06\/realized-vs-estimated-returns-300x182.png 300w, https:\/\/portalvhds29z8xdrqhczq.blob.core.windows.net\/wordpress\/2014\/06\/realized-vs-estimated-returns-492x300.png 492w\" sizes=\"auto, (max-width: 775px) 100vw, 775px\" \/><\/a><\/p>\n<p>I loved the academic euphemism for &#8220;most investors are clueless&#8221;: <em>The correlation coe\u00b1cient between return estimates and realized returns is not distinguishable from zero.<\/em> And this gem: <em>The correlation between self ratings and actual performance is also not distinguishable from zero.<\/em><\/p>\n<p>Read the whole thing <a href=\"http:\/\/papers.ssrn.com\/sol3\/papers.cfm?abstract_id=1002092\" target=\"_blank\">here<\/a> (pdf) and open a <a href=\"#registerModal\">StockViz account<\/a> and start tracking your portfolio now!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>From Why Inexperienced Investors Do Not Learn: They Do Not Know Their Past Portfolio Performance (Glaser, Weber) A necessary condition to learn is that investors actually know what happened in the past and that the views of the past are not biased. Investors are hardly able to give a correct estimate of their own past &hellip; <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3471,9],"tags":[3251],"class_list":["post-1994721","post","type-post","status-publish","format-standard","hentry","category-investing-insight","category-your-money","tag-behavioral-finance","entry"],"_links":{"self":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/1994721","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/comments?post=1994721"}],"version-history":[{"count":0,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/posts\/1994721\/revisions"}],"wp:attachment":[{"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/media?parent=1994721"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/categories?post=1994721"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stockviz.biz\/index.php\/wp-json\/wp\/v2\/tags?post=1994721"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}