7 Mistakes Every Investor Makes (And How To Avoid Them): A manifesto for smarter investing
212
7 Mistakes Every Investor Makes (And How To Avoid Them): A manifesto for smarter investing
212Paperback
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Overview
Every investor makes mistakes. Private or professional, amateur or experienced, there is no exception. And many of these are common mistakes. Whether or not they want to admit it, many investors have committed the same errors. How can you avoid these mistakes? How can you distinguish yourself as an investor and improve your performance? Joachim Klement, research analyst and former Chief Investment Officer with 20 years’ experience in financial markets, has the answers. Seven Mistakes Every Investor Makes (And How To Avoid Them) calls upon years of experience and scientific research to deliver expert insight into the most common mistakes plaguing investors. From there, Klement outlines his personal tools and techniques, developed, refined and successfully implemented over many years in the finance industry, to help avoid and mitigate such mistakes. His ultimate aim: to help you help yourself. The mistakes covered include forecasting, short- and long-term orientation, repeating past errors, confirmation bias, not delegating to experts, and blind trust of traditional assumptions. Seven Mistakes Every Investor Makes (And How to Avoid Them) is a must-have guide for every investor. Packed with scientific research and personal wisdom, this book draws together the most common investing mistakes in order to practically reveal how to overcome and eliminate them. Don’t make another avoidable mistake by missing out on this book.
Product Details
| ISBN-13: | 9780857197702 |
|---|---|
| Publisher: | Harriman House |
| Publication date: | 02/04/2020 |
| Pages: | 212 |
| Product dimensions: | 6.45(w) x 9.17(h) x 0.45(d) |
| Age Range: | 18 - 10 Years |
About the Author
Joachim studied mathematics and physics at the Swiss Federal Institute of Technology (ETH) in Zurich, Switzerland and graduated with a master’s degree in mathematics. During his time at ETH, Joachim experienced the technology bubble of the late 1990s first hand. Through this work, he became interested in finance and investments and studied business administration at the Universities of Zurich and Hagen, Germany, graduating with a master’s degree in economics and finance and switching into the financial services industry in time for the run-up to the financial crisis.
Table of Contents
About the Author ix
Acknowledgements xi
Introduction, or How a Relay of Misery Can Lead to Good Things 1
Let me take you on my journey 3
My selection of the seven most common mistakes 4
Chapter 1 The Shortest Investment Joke: My Forecast Has a Decimal Point 9
The future is uncertain - deal with it 13
It gets worse… 16
The uncertainty introduced by compound interest 18
Increasing uncertainty 20
More isn't more: information versus accuracy 23
The true value of company analysis 24
Resist the temptation to summarise everything into one number 25
Integrating uncertainty into the investment process 28
A better way to deal with uncertainty 31
Main points 34
References 35
Chapter 2 The Long Term is Not the Sum of Short Terms 37
Let's blame the media, shall we? 41
The media is a symptom, not the cause 43
Short-termism is bad for your wealth 45
Finding excuses for trading is easy 48
Don't just do something, sit there 51
Don't check your portfolio too often 52
Professionals need to have the right incentives 53
How you visualise performance matters 54
Manage your information flow 57
Main points 58
References 59
Chapter 3 Are You a Long-term Investor - or Just Stubborn? 61
Contrarian investing for the long run 64
Contrarian investing versus momentum investing 66
Value investing for the Long run 68
A cautionary tale 71
Learning from short-term investors 73
The secret of successful traders: emotional detachment 75
Listen to the data to rein in your emotions 77
A mental model of data aggregation 79
Embrace stop-losses 81
Main points 86
References 87
Chapter 4 We Learn From History That We Do Not Learn From History 89
Learning from experience in a laboratory 94
Trading begins and chaos ensues… 95
Cynical bubbles and bubble echoes 97
Bubble echoes in the wild 99
Forgetting past experiences: rekindling a bubble 100
Career risk as an obstacle to learning from experience 102
Most fund managers get worse with experience 103
Individual investors don't learn from the past either 105
Learning from experience 106
Main points 112
References 113
Chapter 5 Ignoring the Other Side of a Story 115
The outcomes for investors were vastly different 118
A crucial mistake 120
We don't like to be contradicted 122
Test your confirmation bias 123
The allure of growth 126
The safety of value 127
Economic growth and stock returns 129
Engage with views you disagree with 130
Change your reading habits 132
Your new best friend: the devil's advocate 133
Main points 134
Free investment blogs 135
References 136
Chapter 6 You Get What You Pay For 137
Active fees for passive funds 140
Why are fund managers becoming less active? 142
Avery public failure 144
An alternative way to lose money for investors 144
The impact of Lower tracking error on investment performance 145
Incentives matter 147
Employee-owned funds perform better 148
So do smaller funds 149
A 1960s advertisement explains the advantage of smaller funds 151
How to improve your investment performance 154
Active share isn't everything 157
Small, active and employee owned 158
Main points 159
References 160
Chapter 7 Navigating a Complex World 161
Why doesn't Delphi own the world? 163
A recent regime change in currency markets 164
Currency hedge funds stop performing 166
The flawed foundations of modern finance 167
Financial markets as complex dynamic systems 172
Insights from complex dynamic systems 173
How to think about markets as systems 185
Main points 190
References 191
Chapter 8 Over To You 193
Get to know yourself 195
Improve yourself 197
My rules for forecasting 198
Never stop learning 199