Yesterday, James O’Shaughnessy posted a long and intriguing tweetstorm about investor ignorance. O’Shaughnessy is the chairman and founder of O’Shaughnessy Asset Management LLC, and the author of the classic investing book “What Works on Wall Street.” The thread is worth reading from start to finish. This post, as regular readers know, was about one of my favorite subjects. To be more precise, it was about our own lack of understanding of own lack of understanding. From the original work by Daniel Kahneman and Amor Tversky, as laid out in their famous 1974 paper “Judgment under Uncertainty,” to the Dunning-Kruger concept of metacognition — the specific skill needed to recognize one’s own skill set — this foible continues to be of great importance to investors. O’Shaughnessy starts his discussion on a note of humility, writing there are “some things I think I know and some things I know I don’t know.” That simple observation places him ahead of oh, say, 80% of all investors. This is ...

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