A Hardvard economics professor explains in this CNNMoney.com article how investors often make mental errors in their investment decisions.
A terrific example: news reports and advertisements about gold. After a decade of spectacular returns, more and more people are piling in. This summer the gold ETF became the largest exchange-traded fund in the market, surpassing ones that track the Standard & Poor's 500!
What we have here is a classic example of people chasing the trend -- of mistakenly thinking that what has happened in the recent past will reproduce itself in the near future. I fear it is going to end badly.