The term Illusion of Control was coined by psychologist Ellen Langer after identifying how people often tend to overestimate their ability to control events. A good part of this is due to the fact that we often tend to confuse between skill and chance events and start seeing connections or causality where there isnrsquo;t any.
For example, in investing, we may be picking stocks without proper diligence during a bull run and attribute the increase in value to our lsquo;skillrsquo; at choosing stocks.nbsp; Leading us to overestimate our abilities and give us an lsquo;illusion of control over the value change of our chosen stocks.
However, this rise in value is likely to have occurred with a majority of stocks anyway and has nothing to do with our skills. Overconfidence in our skills or sense of control over the outcome of our investments may lead to losses when the overall circumstances arenrsquo;t conducive.
ldquo;Remember that nobody accepts randomness in his own success, only in his failure.rdquo; Nassim Nicholas Taleb