The Little Book of Behavioral Investing: How not to be your own worst enemy

( 6 )

Overview

Ben Graham, the father of value investing, once said: "Theinvestor's chief problem—and even his worst enemy—islikely to be himself." Sadly, Graham's words are still true today.Bias, emotion, and overconfidence are just three of the manybehavioral traits that can lead investors to lose money or achievelower returns. Fortunately, behavioral finance, which recognizesthat there is a psychological element to all investor decisionmaking, is now firmly embedded in the mainstream of finance.Applying behavioral principles...

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Overview

Ben Graham, the father of value investing, once said: "Theinvestor's chief problem—and even his worst enemy—islikely to be himself." Sadly, Graham's words are still true today.Bias, emotion, and overconfidence are just three of the manybehavioral traits that can lead investors to lose money or achievelower returns. Fortunately, behavioral finance, which recognizesthat there is a psychological element to all investor decisionmaking, is now firmly embedded in the mainstream of finance.Applying behavioral principles to an investment portfolio can helpinvestors avoid some of the mental pitfalls that so often costthem, and financial institutions, billions.

In The Little Book of Behavioral Investing, behavioral financeexpert James Montier takes you on a guided tour of the most commonbehavioral challenges and mental pitfalls that investors encounter,and provides you with strategies to eliminate these traits. Alongthe way, he shows how some of the world's best investors havetackled the behavioral biases that drag down investment returns, sothat you might be able to learn from their experiences.

Page by page, Montier explains the importance of learning toprepare, plan, and then commit to a strategy—that is, do yourinvestment research while you are in a "cold" rational state, whennothing much is happening in the markets—and then pre-committo following your analysis and action steps. He also stresses thefolly of trying to forecast what the markets will do, and revealshow the idea of investing without pretending you know the futuregives you a very different perspective. Throughout the book,Montier stresses why the need to focus on process rather thanoutcomes is critical in investing. Focusing upon process, he shows,frees us up from worrying about aspects of investment that wereally can't control—such as returns. By focusing uponprocess, we maximize our potential to generate good long-termprofits.

The Little Book of Behavioral Investing offers a range oftime-tested ways to identify and avoid the pitfalls of investorbias. By following these simple strategies, you will learn toovercome your own worst enemy when it comes toinvestments—yourself.

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Product Details

  • ISBN-13: 9780470686027
  • Publisher: Wiley
  • Publication date: 2/2/2010
  • Series: Little Books, Big Profits (UK) Series , #35
  • Edition number: 1
  • Pages: 219
  • Sales rank: 257,088
  • Product dimensions: 5.30 (w) x 7.10 (h) x 4.10 (d)

Meet the Author

James Montier is a member of GMO's asset allocation team. Prior to that, he was the co-Head of Global Strategy at Société Générale and has been the top-rated strategist in the annual Thomson Extel survey for most of the last decade. Montier is the author of three market-leading books, Behavioral Finance: Insights into Irrational Minds and Markets, Behavioral Investing: A Practitioners Guide to Applying Behavioral Finance, and Value Investing: Tools and Techniques for Intelligent Investment. He is a Visiting Fellow at the University of Durham and a Fellow of the Royal Society of Arts. Montier has been described as a maverick, an iconoclast, and an enfant terrible by the press.

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Table of Contents

Foreword.

Introduction: This Is a Book About You.

Chapter One: In the Heat of the Moment.

Chapter Two: Who's Afraid of the Big Bad Market?

Chapter Three: Always Look on the Bright Side of Life.

Chapter Four: Why Does Anyone Listen to These Guys?

Chapter Five: The Folly of Forecasting.

Chapter Six: Information Overload.

Chapter Seven: Turn off That Bubblevision!

Chapter Eight: See No Evil, Hear No Evil.

Chapter Nine: In the Land of the Perma-Bear and thePerma-Bull.

Chapter Ten: The Siren Song of Stories.

Chapter Eleven: This Time Is Different.

Chapter Twelve: Right for the Wrong Reason, or Wrong for theRight Reason.

Chapter Thirteen: The Perils of ADHD Investing.

Chapter Fourteen: Inside the Mind of a Lemming.

Chapter Fifteen: You Gotta Know When to Fold Them.

Chapter Sixteen: Process, Process, Process.

Conclusion: The Road to Hell Is Paved with Good Intentions.

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Customer Reviews

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( 6 )
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Sort by: Showing all of 6 Customer Reviews
  • Anonymous

    Posted December 23, 2013

    A look in the mirror

    We have met the enemy and he is us. Good little book of the series on keeping your emotions in check.

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  • Posted April 17, 2010

    very compact but easy to read

    simplifies the field without talking down. Also provides way to bypass mental blindspots

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  • Posted March 20, 2010

    Ubiquitous trading book

    The guy is a knowledgeable trader. However, like most trading books, this is probably a waste of money for most readers interested in trading.

    Was this review helpful? Yes  No   Report this review
  • Anonymous

    Posted November 12, 2010

    No text was provided for this review.

  • Anonymous

    Posted March 16, 2010

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  • Anonymous

    Posted July 31, 2011

    No text was provided for this review.

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