It’s an inconvenient fact of life that smart people often do stupid things – just ask investors in Long Term Capital Management, the most infamous hedge fund blow-up of the 90s. Morgan Housel from the Collaborative Fund has a couple of suggestions as to why this happens. 1) “Intelligence increases the ability to fool yourself with elaborate stories about why something happened,” and 2) “Intelligence pushes you toward the idea that complex problems require complex solutions.” Self-delusion obviously plays a big part in all this, or as Housel puts it: “A normal person could never predict 19 of the last two bear markets and still consider themselves a market oracle. You need an advanced degree and an Excel model with 100 tabs to justify that kind of mental gymnastics.” Read the full story here: (VIEW LINK)
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