Found through the Efficient Frontier web site: a presentation saying that people tend to make a lot of mistakes when they invest. People are overconfident about their abilities; they trade too much; they choose stocks based on what's making the news and what did well last year.
Supposedly, men suffer more from the overconfidence syndrome than women. Hmmm...
I know I'm probably as guilty as anyone. I am inclined to the contrarian approach, so I like to sell short. Incredibly, I've lost money on this. I've even lost money shorting dot-com companies that don't make money. To make it worse, I hate to cover shorts that are losing me money.
Fortunately, I'm most of my savings are out of my own control, in 401k retirement accounts and the like, where I only get to select the funds. That part of my savings has done much better overall than the part that I control myself. Diversified index funds are the way to go.
Having said that, I think the stock market is overvalued and I cannot resist looking for a chance to short.