A healthy dose of self-assurance is usually necessary to succeed in most professions or activities. But when it comes to investing, overconfidence can be the kiss-of-death.
You see, folks, the capital market system is so complex and fast moving that I just don't think it can be sufficiently comprehended by the human mind. If investing makes total sense to you, then I would venture to say that you don't understand it.
In other words, you don't know what you don't know.
Do you think anyone really knows where the market is headed? Financial academics have been collecting and analyzing data on financial forecasting since the Great Depression and they have all pretty much come to the same conclusion: NO ONE has ever been able to consistently forecast market direction.
That, by the way, would be a useful thing to remember the next time you listen to a market "strategist" on TV or the web.
"But, Mark, over the years, I've been pretty successful at picking stocks."
Great, but let's be careful not to confuse luck with skill. And it might help to remember that every time you buy or sell, the person on the other side of the trade most likely has an IQ north of 160, spends 12 hours a day devouring industry minutiae and has access to computing power and databases that would make your hair catch fire and your head explode (or worse yet, an insider trader with tons more information than any outsider could possibly have).
Look at it this way...
Imagine yourself and your broker/advisor playing doubles tennis against a couple of invisible opponents. What you don't realize is that you've taken on, uhh... Novak Djokovic and Rafael Nadal!
When it comes to investing, I believe that Benjamin Graham (Warren Buffett's original and most influential mentor) probably said it best...
"The biggest enemy you're liable to face is staring out at you from the mirror."
And ladies and gentlemen, no matter how much you learn or how much you plan, there's nothing... and I mean NOTHING... that prepares you for the shock and trauma inflicted by that first ugly, miserable bear market you encounter.
If you experienced the 2000-2002 dot-com crash or the 2007-2009 financial crisis, you know this already.