When the market makes you feel like a genius.
Most bull-market gains come from a rising tide, not your skill. Here's how to tell the difference.
Arjun doubled his money and thought he had figured it out
Arjun opened his demat account right after the crash. Everything he bought went up. A year later, he was telling people he'd cracked the market. He hadn't cracked anything. The market had simply recovered, as it always does. But the feeling of genius was real — and that feeling was the most expensive thing in his portfolio.
In a bull market, almost everything rises. Your picks go up. Your neighbour's picks go up. Random picks go up. The market carries everyone. But your brain records 'I chose well' — not 'the tide lifted everything.'
Overconfidence is not arrogance. It's quiet and invisible. You experienced the gain. The gain feels like proof your analysis was correct. But a gain in a rising market tells you almost nothing about whether your reasoning was actually sound.
The hidden cost lives in the trading. Confident investors buy and sell more often. Research by Barber and Odean found that overconfident investors trade significantly more and earn substantially less — even before taxes. Every trade carries brokerage, STT, and short-term capital gains tax at 20%. The decisive-feeling trades quietly drain your actual returns.
SEBI's 2023 study found 9 out of 10 individual F&O traders lost money in FY2021-22. India's demat accounts grew from around 4 crore in 2020 to over 15 crore by 2024 — most opened during the bull run. Professional fund managers with full research teams underperformed their benchmark index roughly 80–90% of the time over 10 years (SPIVA India Scorecard, 2023). If they can't consistently beat the index, the odds say something worth hearing.
The satta adda that feels like skill
SEBI studied retail F&O traders in FY2021-22. Nine out of ten lost money. But they kept trading — because the ones who won felt like proof of skill. A satta adda works the same way. The occasional big win is vivid and loud. The steady drain of losses is quiet and forgettable. Overconfidence lives exactly in that gap: between what you remember and what actually happened.
Why this matters
You probably made money in the last bull run. Almost everyone did. The real question is whether your analysis caused those gains or the market carried you. If you can't answer that honestly, you don't actually know your own edge. The fix costs nothing: write your predictions down before you invest. Date them. Come back in a year. Your written record will tell you things your memory never will — without excuses, without selective forgetting.
Move the slider. See what your edge really costs.
Drag the slider to set the annual edge you believe you have over the index. The widget shows what that claim means in rupees after 20 years.
The Overconfidence Test: What Is Your Edge Actually Worth?
You invest ₹12 lakh over 20 years. A plain Nifty index SIP — no research, no screen time, no brokerage churn — grows it to ₹50 lakh. At your claimed 15%, you would reach ₹76 lakh. Now the honest question: do you have a written record of every trade from the last three years that proves this edge, after all taxes and fees? Most people don't. The bull market provided the returns. Overconfidence took the credit. Illustrative; 12% is Nifty's approximate long-run CAGR.
Your written record tells the truth your memory won't.
Where people go wrong
- Attributing bull-market gains to personal skillA rising market lifts most stocks. The gain proves the market rose — not that your analysis was correct.
- Trading frequently on convictionEach trade costs brokerage, STT, and potentially 20% short-term capital gains tax. Conviction doesn't offset those compounding drains.
- Holding two or three 'sure thing' stocksConcentration feels like confidence. In a down cycle, it becomes your largest loss — centred exactly where you were most certain.
- Never writing predictions downMemory is selective. Wins stay vivid; losses blur. A written log is the only honest scorecard you have.
A bull market flatters everyone — separate luck from skill before you take on more concentrated risk.
Every extra trade costs you tax and fees; a boring SIP beats frequent trading over 20 years.
Write your predictions down before you invest. Your record is the only cure for overconfidence.
We remember our wins in full colour and our losses in grey. Overconfidence is not stupidity — it's the natural result of a memory that protects your ego at the cost of honest accounting.