Some memories come with a very compelling sense of truth about them. And that happens to be the case even with memories that are not true.

Finally, the illusions of validity and skill are supported by a powerful professional culture. We know that people can maintain an unshakeable faith in any proposition, however absurd, when they are sustained by a community of like-minded believers. Given the professional culture of the financial community, it is not surprising that large numbers of individuals in that world believe themselves to be among the chosen few who can do what they believe others cannot.

One of the problems with expertise is that people have it in some domains and not in others.

Question: So investors shouldn't delude themselves about beating the market? Answer: "They're just not going to do it. It's just not going to happen."

If individuals are rational, there is no need to protect them against their own choices.

Most successful pundits are selected for being opinionated, because it's interesting, and the penalties for incorrect predictions are negligible. You can make predictions, and a year later people won't remember them.

In a rising market, enough of your bad ideas will pay off so that you'll never learn that you should have fewer ideas.