Over the years, my experience has been that most investors (including myself) who lose money fail because of ‘overconfidence.’ When they buy, they are convinced that an investment will be highly profitable and seldom consider that they could be wrong. Likewise, when investors sell an asset they are sure that it no longer has a significant upside potential. Investors’ overconfidence leads to a complete lack of diversification and heavy concentration of money in a single asset class.
Investors should consider carefully that win/win transactions are far less common than win/lose transactions. Usually either the buyer or the seller makes a big mistake. Successful investing is about making sure that it is not you that makes the big mistake.
I am enclosing a report by Michael Gayed entitled “Money Illusion and Why the ‘Bond Bubble’ Must Burst.”
I wish my readers a nice, sunny, and peaceful summer.
Kind regards
Yours sincerely
Marc Faber
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