Joseph Javier Perla

Anyone who invests in the stock market and does well likes to think that he skillfully causes his own profit. Anyone who does worse than the market or loses money blames the news or some other external, random factor. People tend to console their ego, psychology has proven this. Psychologists call this effect the “self-serving” bias.
I began investing in the stock market after New Year’s Day. Since then, the stock market (S&P 500 index) has risen 4%. My stock picks, all two of them, carry an impeccable, lossless record. The first took advantage of the January effect. The second rested on a rational, informed opinion about the short-term direction of a stock, Google. On top of my brilliant decision, the S&P 500 added Google to their index the following day. Hundreds of mutual funds and indices now must buy Google, boosting its stock price by something like 8% instantly, guaranteed. To date, my returns run in the range of 13%-15% this year, 10% above the average.
I have to be careful not to feed my self-serving bias.