Overconfidence
Being more sure than the evidence allows, usually shown by forecast ranges that contain the true answer far less often than claimed.
In plain English
It's measurable: collect someone's 80% ranges and count how often the truth landed inside. Most people, experts included, give ranges that are much too narrow, because a wide range sounds like not knowing. The fix is to score your past ranges and widen them until the hit rate matches the promise.
Uncle Gary explains
In more than 13,300 forecasts, US finance directors gave 80% ranges for the next year's stock market return. The market landed inside 36% of the time.
Why it matters for your money
A forecast of '8 to 12% a year' for a strategy, in a market that moves about 16 points in a typical year, is overconfidence written as a number.
Where we tested it
Related terms
All glossary terms. Educational content, not financial advice.