Overconfidence Bias

The tendency to overestimate your own investing skill and the accuracy of your predictions.

Overconfidence bias leads investors to trust their own judgment more than the evidence warrants, often resulting in excessive trading, insufficient diversification, and underestimating the risk of a position. Studies consistently link higher trading frequency driven by overconfidence bias to lower net returns after costs.

Overconfidence bias led him to concentrate his entire portfolio in one stock he was certain couldn't lose.