Extrapolation, overconfidence and turning points

It is generally at the turning point of events that many experts as well as investors get carried away with the momentum and assume continuity

So often, experts extrapolate the (recent) past to predict. So long as the trend continues, they are proved right. This gives them overconfidence and they are celebrated as heroes.

Then, the inevitable happens. The events take a turn.

 

#RidingTheRollerCoaster – 46

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