Bull Markets Make Everyone Feel Like A Genius
But just because we’re making money it doesn’t mean we’re suddenly genius investors
(Not intended to be investment advice, opinions are my own.)
Markets have done spectacularly lately. Big tech had great earnings, AI stocks are soaring, and even meme stocks have made a comeback. It’s made it so that everyone and their mother believes themselves to be a brilliant investor.
But don’t let it get to your head. Markets go up and markets go down. And no matter how many times we ride that rollercoaster, inevitably we feel like geniuses when we’re on the way up and losers on the way down.
That’s because we put too much weight on outcomes. If we make money, we must have been right. And if we lose money, we must have been wrong.
But constantly thinking this way can permanently alter our ability to make good financial decisions. When we prioritize outcomes over the process that created those outcomes, we start to lose the ability to analyze and understand why things happened the way they did. We also lose the ability to think probabilistically — i.e. the ability to envision and assign rough probabilities to the many ways that the future could conceivably unfold.
