Investing is not necessarily an activity where the smartest person always wins the race. Just like the parable about the tortoise and the hare, there are times where being slow and steady wins you the race. While it is true that backing the right horse will bring you positive returns, this has to be coupled with correct a steady emotional state and an understanding of current market conditions.

What I’m talking about here are the dangers of being overconfident in a rising market. Yes, bullish markets can actually lose you money when prices keep rising and you believe you have a hot hand and can do no wrong. Investopedia defines the hot hand as the belief that because you have a string of successes, you will continue to experience future success. When applied to investing, this might lead you to believe every stock you pick is going to rise even …