Wikipedia defines Illusory Superiority as:

a cognitive bias that causes people to overestimate their positive qualities and abilities and to underestimate their negative qualities, relative to others.

This bias runs rampant in areas such as intelligence, memory, cognitive tasks, academic ability, and job performance, popularity, and health.

In two U.S. studies of people's opinions of their own driving ability, over 80% rated themselves as above average.

In a study on interpersonal popularity, results showed that the participants generally had exaggerated perceptions of their own popularity, particularly in comparison to their own friends.

And so it is with investment acumen.

Numerous studies have concluded that the majority of mutual fund managers (supposedly the "smart money") fail to beat a comparable but passively managed index.

Even more telling, the majority of investors in a given fund fail to match the performance of the fund (because of ill-timed movement from one investment to another, the typical
"dollar-weighted" return trails the fund's "time-weighted" return).

Not every investor can be above average.  In fact, because of expenses and taxes, and an unfounded superiority complex, the majority of investors will be below average.

So what to do?

• Admit you aren't any smarter than the consensus of all other investors (ie, the market).
• Resolve not to play "the loser's game" (trying to beat the market) and instead invest in a diversified portfolio of low-cost index funds.
• Whenever you hear a stock tip (or other "hot investment strategy"), ask yourself "if that's such a great investment, why would he tell me about it?"

"Dishonest money dwindles away, but he who gathers money little by little, makes it grow."
-- Proverbs 13:11