Overconfidence is the worst investment bias, and I have done posts on that. Let us see what can be done to avoid over-confidence….or what I think will work.

1. Keep a notebook and write down the reasons why you buy or sell a share: even if you get a buy or sell right, you might get it right for a wrong reason. I sold Eicher Motors when it was a truck maker, and I felt it did not know how to make/sell trucks. Wrong. Eicher had some of the best engineers. However, as we all know it was “bullet” which made the company a great success.
2. Ask how long did you think of the decision. If the time taken is short, it just means you are working on your gut, not on the basis of any logic or even a cursory glance at the balance sheet.
3. Whom did you ask to verify/validate your thought? If it s a kid, think again. Speak to your enemy as much as you speak to your friends.
4. Get a friend to review your portfolio.
5. Even better, get an enemy to review!
6. Do not foolishly keep riding your success. Keep booking profits.
7. Diversify. Holding on to a success story is very tempting….but please keep diversifying….