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The Value of a Mad Money Account

Setting aside a small chunk of a portfolio for trading can help scratch the itch of overconfidence.

This is the 15th article in the Behavioral Finance and Macroeconomics series exploring the effect behavior has on markets and the economy as a whole and how advisors who understand this relationship can work more effectively with their clients.

In its most basic form, overconfidence bias can be summarized as unwarranted faith in one's intuitive reasoning, judgment, and cognitive abilities.