Confident men or confidence men?

The confidence we experience as we make a judgment is not a reasoned evaluation of the probability that it is right. Confidence is a feeling, one determined mostly by the coherence of the story and by the ease with which it comes to mind, even when the evidence for the story is sparse and unreliable. The bias toward coherence favors overconfidence. An individual who expresses high confidence probably has a good story, which may or may not be true.

So Daniel Kahneman wrote in his New York Times magazine piece, "Don’t Blink! The Hazards of Confidence".

For some reason I had never made the connection between two things I've known for quite a while: that humans are terrific at finding patterns where they may or may not exist (hence the compelling nature of conspiracy theories), and that we often believe what we want to believe, not what is real. Kahneman makes the connection explicit and illustrates in an unsettling way how it governs the mistakes we make in our investing.

Not that confident investment advisers are necessarily con men, but the effect on investors may well end up being the same. It's a good article. Do yourself a favor and read it before you send more money your adviser's way.