“I’ll Get Out in Time”—What Kioxia’s Plunge Reveals About Our Greatest Enemy: Human Psychology

Kioxia’s share price has plunged, and the internet is apparently in an uproar.

Kioxia is a semiconductor manufacturer best known for NAND flash memory. The AI boom drove expectations for data-center and semiconductor demand sharply higher, and its share price soared along with them.

At one point, the momentum was so extraordinary that Kioxia overtook Toyota in market capitalization and became Japan’s most valuable listed company.

But that was when I began to feel that something did not quite add up.

The AI market will almost certainly continue to grow. Still, a semiconductor company is fundamentally a component supplier supporting the industry’s foundation. The idea that its valuation could remain far above that of Toyota, Japan’s best-known manufacturer of finished products, seemed almost too perfect a story when viewed calmly.

I suspect that even many of the people buying the stock felt, somewhere in the back of their minds, that the price might already be too high.

Yet once a market gathers momentum, people lose their composure with remarkable ease.

“Yes, it’s expensive. But surely it will rise just a little more.”

Eventually, that thought becomes something even more dangerous:

“I’ll manage to sell before the crash.”

This baseless confidence that somehow I alone will be fine may be part of the standard human package.

Psychologists call it overconfidence bias.

We tend to believe that our judgment and abilities are above average. We think it about our driving, our work, and, of course, our investing.

When everyone believes they are above average, something is clearly wrong with the arithmetic.

When Success Is Mine and Failure Is Theirs

What happens afterward is even more revealing.

While the market is rising, people tell themselves:

“My analysis was excellent.”

“I have talent.”

“I saw what others could not.”

But the moment the price collapses, the explanation changes:

“The company is to blame.”

“Institutional investors manipulated the market.”

“Short sellers caused this.”

“The market is irrational.”

Looking through Japanese aggregation sites, I found page after page of resentment directed at Kioxia. I could not help smiling wryly.

When we win, we take the credit. When we lose, someone else gets the blame.

Apparently, that too is part of the standard human specification.

Why I Stick to Index Funds

I invest in stocks, but I do not buy individual companies. I limit myself to index funds.

I invest surplus cash regularly and mostly leave it alone. It will never make me rich overnight, but it is also unlikely to let leveraged trading wipe out my entire life. I think of it as a form of savings that is less vulnerable to inflation.

But this is not really an article about stocks.

The same confidence appears throughout working life:

“I’m a little smarter than most people.”

“I can assess the situation correctly.”

“Other people may fail, but I can make it work.”

I see this particularly often among IT engineers, many of whom seem convinced of their own intelligence.

We know difficult technical terms. We understand complicated systems. We solve problems that most people cannot even see. After doing that work for years, it is easy to absorb the belief that we must be smarter than average.

Some engineers genuinely are exceptional. But expertise in one field and sound judgment as a human being are not the same thing.

Someone may understand technology deeply and still get swept up in an investment frenzy. They may read code precisely but fail completely to read another person’s emotions. They may become so certain that their design is the only correct one that they stop listening to everyone else.

And if I am honest, I too sometimes assume that I must be at least a little smarter than average.

That thought itself is probably overconfidence bias at work.

Perhaps “Below Average” Is the Safer Assumption

If most people believe they are above average, the likelihood that I am making the same mistake is fairly high.

That is why it may be healthier to assume that my own intelligence could actually be below average.

If I truly am below average, then at least I understand reality correctly. If I am above average, the assumption merely makes me a little more cautious. There is little harm in that.

It is certainly safer than putting everything into a leveraged position while telling myself that I alone will escape before the crash.

Of course, the moment I begin congratulating myself for being humble, a new form of overconfidence appears: the belief that I alone have overcome overconfidence bias.

The human brain is remarkably good at preserving an escape route for itself.