Reports of the death of mean reversion are premature This was originally written for the FT, but they seem to have gone the same way as so much media and are dumbed down these days - they said it was too technical after sitting on it for more than a week. Investing based on mean reversion will be less compelling II. Tail hedging becomes more important IV. Historical benchmarks and correlations will be challenged V. Less credit will be available to sustain leverage and high valuations Implications IV and V seem pretty reasonable to me.
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Aug 20, Pete Klein rated it it was amazing Very good book in helping you understand your biases and overcoming them through process. Great examples used to showcase his points and help the reader understand the concepts. Jan 16, Eugenio Gomez-acebo rated it really liked it This is a very interesting book about human behaviour, biases, how our brains make mistakes and the consequences in investing.
History of humankind is replete with bad choices by both individuals and nations. The interesting part is that we are predictably irrational. The author explains the X-system and the C-system guts vs brains.
How the key for investing successfully is quite simple: prepare, plan and pre-commit to a strategy. How we need to be skeptical, avoid useless predictions, and This is a very interesting book about human behaviour, biases, how our brains make mistakes and the consequences in investing. How we need to be skeptical, avoid useless predictions, and focus in penetrating analysis. Simple rules, like taking the current market price and back out what it implies for future growth.
Avoid a burden of information that only provides confidence but not knowledge. Avoid nice stories. Look for hard data that can prove us wrong. Focusing on process, rather than results, seems to be the only way to avoid being drowned by the inability of our brains to deal with fears, ambiguity or risk aversion The book was shorter, narrower and less in-depth than Trading in the Zone On the other hand, nearly all people who manage their own investments make a myriad of repeated mistakes based on patterned and harmful behavior.
Behavioral investing studies these patterns. You can easily This book is not nearly as good or powerful as Trading in the Zone, but it was worthwhile reinforcement of the earlier lessons. You can easily learn to identify them.
Then comes the hard part Any good book on behavioral investing is valuable. It takes a bit of brainwashing Stemming from the research Kahneman, Tversky, Thaller, Ariely, and others have performed- this book is excellent at describing the major fallacies our brain falls victim to I. All in all the book was insightful and a fun read!
It reveals our "bad thinking" commonly used by even the best investment fund managers. Things like "going with the flow", or only reading research that positively agrees with your own decisions. I only took one star off because the Kindle version is loaded with grammatical and typographical errors. A brilliant author who backs up his statements with cold hard research. Apr 17, George Florin rated it liked it Interesting read, but personally, I already knew some of the information here.
What I did not like was that some experiments that he mentions in the book are not credited to the one who actually did them, which is Daniel Kahneman in the book Thinking fast and slow. One example of such experiment is the one with the risk aversion, and also the one with the price for the coffee mugs. But he credits the rest of the psychologists, so that is fine. Ideas I stuck with: -To keep a journal with all the Interesting read, but personally, I already knew some of the information here.
Ideas I stuck with: -To keep a journal with all the emotions I had when making a transaction on the stock market. This originates from George Soros. This leads to an exaggerated optimism.
James Montier’s Lessons on Behavioral Investing
That would be the historical precedent. The bat costs a dollar more than the ball. How much does the ball cost? Every day the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long will it take to cover half the lake?
The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy
All too many investors are unaware of the mental pitfalls that await them. Even once we are aware of our biases, we must recognise that knowledge does not equal behaviour. The solution lies is designing and adopting an investment process that is at least partially robust to behavioural decision-making errors. This book is unique in combining insights from the field of applied psychology with a through understanding of the investment problem.
Similar authors to follow
Aug 20, Pete Klein rated it it was amazing Very good book in helping you understand your biases and overcoming them through process. Great examples used to showcase his points and help the reader understand the concepts. Jan 16, Eugenio Gomez-acebo rated it really liked it This is a very interesting book about human behaviour, biases, how our brains make mistakes and the consequences in investing. History of humankind is replete with bad choices by both individuals and nations.
Value Invest London
For many investment professionals James Montier is behavioural finance. Its largely through Montier that concepts like anchoring, hindsight bias, herding etc. Too few read books, instead the source of information is papers from investment banks. Hence there is a need for a bridge between theoretical advances and investment practitioners. For behavioural finance Montier has been this bridge and a whole generation of investment professionals is wiser as a result. This is Montiers second book. The first one builds on a number of lectures in behavioural finance held as a visiting professor at university.