Overconfidence & Failure!

If you experience initial success in your journey as investor there is a tendency to become overconfident. This happens because you haven’t faced failure yet. Failure is part & parcel of investing. If you are positive, then you can learn more from your failures and avoid those mistakes. Overconfidence leads to overestimating your ability to predict market movements. This especially occurs during a bull rally. For example, investors who entered the market during Covid would have overestimated their ability to generate returns. That may have also led some people to invest in new-age companies such as Paytm and Zomato, despite their losses and lack of a good financial track record, during their Initial Public Offering (IPO).