I have always liked quotes, and more importantly, reflecting on them. A good quote often distills experience and observation into a core principle. Because of that, it usually carries layers of meaning worth unpacking.
This quote closely resembles a well-known psychological phenomenon called the Dunning–Kruger effect. I’ve personally experienced this effect myself (hopefully I’ll have the chance to share that story in a future piece).
Financial markets are environments full of variables and constant change. This naturally leads to shifts in behavior, characteristics, and the nature of capital flows. Any knowledge or experience you accumulate during a particular phase can quickly become outdated.
That’s why, when investing, it’s crucial to maintain a cautious mindset, detach emotions, and avoid excessive confidence. Even legendary investors like Ray Dalio have paid a price for failing to do so.