Unfortunately, skill in evaluating the business prospects of a firm is not sufficient for successful stock trading, where the key question is whether the information about the firm is already incorporated in the price of the stock. Traders apparently lackthe skill to answer this crucial question, but they appear to be ignorant of their ignorance.

Political columnists and sports pundits are rewarded for being overconfident.

We have a very narrow view of what is going on.

Overconfidence is a powerful source of illusions, primarily determined by the quality and coherence of the story that you can construct, not by its validity.

When people believe a conclusion is true, they are also very likely to believe arguments that appear to support it, even when these arguments are unsound.

Facts that challenge basic assumptions-and thereby threaten people's livelihood and self-esteem-are simply not absorbed. The mind does not digest them.

Although professionals are able to extract a considerable amount of wealth from amateurs, few stock pickers, if any, have the skill needed to beat the market consistently, year after year.