Don't overestimate your knowledge in the stock market

By Dale Gillham. Published at May 1, 2020, in Investor 101

There is an old saying that you don’t know what you don’t know. In my experience, over the past few decades I have found there is one thing in common with both traders and investors and that is many overestimate their level of knowledge and competency when it comes to the stock market.

According to many surveys conducted by the ASX, it is common to find around 50 per cent of adult Australians believe they are very knowledgeable or somewhat knowledgeable when it comes to investing in shares. But given that investors have repeatedly made knee jerk reactions over the past two months out of fear and, at times, greed, it is for this reason why I believe investors overestimate their level of knowledge.

That said, the recent market conditions have caused many traders and investors to question whether they are as knowledgeable as they think they are. As Albert Einstein once said, education is the progressive realisation of our ignorance and no doubt, many would agree that over the past few months the stock market has taught them a lesson or two in how much they do not know.

Unfortunately, many will not learn and are doomed to repeat the mistakes of the past. History shows that time and time again people repeat their mistakes and end up throwing their money at the share market with little or no knowledge in the hope they will profit believing it will be different this time.

In the light of the GFC and the current market conditions, and how many have reacted to these events, I believe this proves how much Australians overestimate their abilities. This is often referred to as cognitive bias, whereby we believe we are better than we actually are, and the alarming thing is that we do not know that we are not very good or knowledgeable. Unfortunately, this means that investors operate under a false sense of security, which leads to overconfidence and mistakes in judgement.

Investing in the stock market is quite easy because it really comes down to following some simple rules but that is the key that most are missing.

Most don’t know which rules to follow and those that follow the masses end up losing money or breaking even at best.

As the old saying goes, your education will cost you one way or another and it’s your choice how much you pay.

Right now is the perfect time to educate yourself so that you do not repeat the mistakes of the past.

Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

Publishers Notice

The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

Australian ASX Small Cap stocks | Why is Australia’s leading small cap publication

Founded seven years ago, is Australia’s leading and longest standing website for investor and finance news, education and expert opinion.

Published by StocksDigital, Finfeed was created to report daily on the comings and goings of ASX listed stocks in the small cap market.

As the first digital publication dedicated specifically to this space, Finfeed soon became the most trusted publication in the market, quickly garnering over two million page views – a number that continues to rise. provides its readers with informative articles that tackle the latest in market moving #ASX small cap news, plus exclusive content you won’t find anywhere else. It is aimed at those with an interest in investing, market education, company performance, start-ups and much more. is the only media organisation operating under the strength of a Financial Services License and is backed by leading journalists and analysts all with brands of their own.

The website aims to inform, educate and entertain with content that drills down into the heart of financial matters.

Finfeed is a leading source of investor and market information, with everything investors need to know about how to invest written in a way that anyone can understand. 

Over the years, the website has expanded beyond exclusively reporting on small caps, to profile Australia’s leading ASX listed small, mid and large caps as well as some of the country’s most successful CEOs and business leaders to find out what makes them tick.

Every day you will find fresh content covering:

Fast Facts

Over 4,000 articles published

Over 2.3 Million Page Views and counting

Over 10,000 followers on social media

Subscriber list growing by 2% monthly

Thanks for subscribing!