Ep 150: The Confidence Trap | How risk affects your investments

In this episode, we talk about the concept of overconfidence in investing, also known as the confidence trap. We explain why confidence is important and how it can either help or hinder us in achieving our goals. We also examine the role of ego in investing and how it affects our self-image as investors and use culinary references and personal stories to make our points. We stress the difference between investing and gambling, and the need to understand and manage risk. The episode ends with some tips for making better investment decisions and seeking advice from experienced investors.

Takeaways

• Confidence can be a double-edged sword in investing.
• Ego influences how we see ourselves as investors.
• The relationship between work and investing can affect our risk appetite.
• Investing should be done with a mindset of doing less and avoiding overdoing it.
• Investing and gambling are not the same thing.
• Calculating risks and considering beta and R-squared can help us make better investment decisions.
• Investing should be seen as a slow and steady process, not a fun or exciting one.
• Seeking advice from experienced investors and learning from personal stories can give us valuable insights.

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