I was chatting with the driver of my airport shuttle a few days ago and he was telling me about his investments. He dabbles in commodity trading - corn, sugar, etc - and he explained to me his strategy for beating the market. Simply put, he looks for trends in price or volume and tries to sell before the price drops.
I then asked him if he knew that other investors have the same information and that profits might be competed away. He agreed with me and insisted that he was *fast* - he was simply faster at spotting the trend than the average investor. Here's the question: how much of investing behavior is based on self-assesment vs. rational expectations? In other words, when are investors driven by their perception that they can beat other investors vs. an assessment that an average investment will be profitable? Fabio
