"The financial markets are generally unpredictable. The idea that you can actually predict what’s going to happen contradicts my way of looking at the market." George Soros

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SELF ATTRIBUTION BIAS

Another phenomenon is known as self-attribution bias, which is the tendency of humans to attribute successful outcomes to our skill and to attribute unsuccessful outcomes simply to bad luck. There isn’t a great deal to say on this topic, as its relevance to investing is largely self-explanatory.

Investors who experience a run of successful results start to develop an inflated opinion of their own skill, thus possibly resulting in both complacency and exaggerated risk taking. And of course, if one endures a horrendous run in the market, by attributing this simply to misfortune, how is one to successfully learn from one’s mistakes?

Take care not to fall into this trap. Try and learn from your unsuccessful outcomes and when success comes your way, do not let overconfidence step in and prevent you from acquiring a realistic assessment of your own talents.

Profile: Warren Buffett

Far and away the most famous and successful stock market investor of all time.

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Why Invest in Shares?

Beyond shares being the best long-term investment and having tax benefits, they also offer other advantages, including flexibility and liquidity.

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Patience in InvestingCharacteristics of an Attractive InvestmentGarbage Collection or Investing?Goals
How Does the Stock Market Work?Why Invest in Shares?Choosing a StockbrokerOpening a Broking AccountBroker's CostsHow Much Do I Need to Start Investing?
Buying SharesDividendsBuying for DividendsTax Implications of Shares
Developing an Investment StrategyTakeoversTakeover StrategiesTakeover Q&A
Basic Options TerminologyContracts for Difference (CFDs)Option UsesOptions
Benefits of DIY SuperannuationWho Can Participate in DIY Superannuation?Investment Requirements
FramingLoss AversionAnchoringHindsight BiasConfirmation BiasCognitive DissonanceRepresentativenessAvailability BiasHerdingSelf Attribution Bias
Benjamin GrahamGeorge SorosWarren Buffett