The pummeling Nokia took this week demonstrated how irrational investors can become in the face of uncertainty.
Evolution has something to do with it, as does overconfidence.
In the end, too often when we face imminent danger, we react instinctively rather than rationally. Superior investing returns may be achieved by those who retain the self-awareness to overcome our limitations. On Wednesday , we discussed the human tendency to be irrational in the face of uncertainty. At those levels, the vast majority of the money flow comes from institutions. So, what we witnessed yesterday was not only individual investors, but also mutual fund, pension, and other large money managers rushing for the exit with lemming-like determination.