Nate Silver: Confidence Kills Predictions

Found via Abnormal Returns.

IU: How do you invest your own money?

Silver: I’m actually a rather dull and conservative investor for the most part—I mostly just invest in index funds or mutual funds with low fees. One thing I know about the market is that it’s a case where a little bit of knowledge can be a dangerous thing and funds do very well when you’re basically piggybacking all the decisions that every other investor is making. For the most part, I’m playing it quite safe; but frankly, I’m looking for things to invest in right now. I think the markets are more likely to be a little hot right now, a little overvalued rather than undervalued in terms of U.S. equities. 

One piece of advice that I get from some people is that if you’re going to invest for fun, take 10 percent of your investments at most to play around with. I’ll invest in a few individual companies in a kind of contrarian way. If I hear friends of mine who work at banks trashing a company and I think it’s for the wrong reasons, then I might be a little more likely to put a little money in it. But 90 percent of my money is in very dull and safe “index fund”-types of vehicles.