The illusion of control in investing

We are all overconfident. We have this natural assumption that if we are doing something ourselves, we'll do it better than anyone else. Psychologists call this 'control bias', and it applies to all sorts of areas of human behaviour. I came across it in an article by an American security expert named Bruce Schneier. He is a cryptographer and computer security specialist who has evolved into a thinker and writer about all kinds of risks and security. I find it interesting that some of his ideas about risk and human reactions to it have great relevance to investing. A couple of years ago, I wrote about how people tend to overrate the risks they face from rare but dramatic events and underestimate the risks that they face from everyday events. Suggested read: Understand and control According to this article, we tend to underestimate risks in situati