Why is overconfidence a problem in investing?

Overconfidence is the tendency to rate one's own information or judgment more highly than is warranted, and behavioral economics cites cognitive biases such as overconfidence as one reason markets are not fully efficient.

Overconfident investors are prone to trading too often or concentrating on a few stocks, increasing their risk. It helps to remember that it is hard to beat the market return consistently for the same level of risk.