1. Overconfidence Bias
Overconfidence Bias causes us to have an inflated opinion of our own talent and/or skill.
In Short: Overconfidence Bias makes us think that we’ve got all the answers. Particularly when people have had a run of good fortune — for example, buying Tesla before the stock took off last year — they are likely to experience the Overconfidence Bias. People mistake a lucky break for superior knowledge of the markets. As people say about aviators, “There old pilots and bold pilots, but no old, bold pilots.”
For Example: In the summer of 1812, Napoleon sent 600,000 French soldiers to invade Russia. Thinking that the campaign would be over by the fall, the French command made no provisions for winter uniforms or tents. As the fall turned into winter and temperatures dropped well below zero, soldiers died by the tens of thousands. Only 120,000 returned to France.