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

by James Montier

Overview

A detailed guide to overcoming the most frequently encountered psychological pitfalls of investing

Bias, emotion, and overconfidence are just three of the many behavioral traits that can lead investors to lose money or achieve lower returns. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle.

In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making.

• Offers time-tested ways to identify and avoid the pitfalls of investor bias
• Author James Montier is one of the world's foremost behavioral analysts
• Discusses how to learn from our investment mistakes instead of repeating them
• Explores the behavioral principles that will allow you to maintain a successful investment portfolio

Written in a straightforward and accessible style, The Little Book of Behavioral Investing will enable you to identify and eliminate behavioral traits that can hinder your investment endeavors and show you how to go about achieving superior returns in the process.

Praise for The Little Book Of Behavioral Investing

"The Little Book of Behavioral Investing is an important book for anyone who is interested in understanding the ways that human nature and financial markets interact."
—Dan Ariely, James B. Duke Professor of Behavioral Economics, Duke University, and author of Predictably Irrational

"In investing, success means—being on the right side of most trades. No book provides a better starting point toward that goal than this one."
—Bruce Greenwald, Robert Heilbrunn Professor of Finance and Asset Management, Columbia Business School

"'Know thyself.' Overcoming human instinct is key to becoming a better investor.¿ You would be irrational if you did not read this book."
—Edward Bonham-Carter, Chief Executive and Chief Investment Officer, Jupiter Asset Management

"There is not an investor anywhere who wouldn't profit from reading this book."
—Jeff Hochman, Director of Technical Strategy, Fidelity Investment Services Limited

"James Montier gives us a very accessible version of why we as investors are so predictably irrational, and a guide to help us channel our 'Inner Spock' to make better investment decisions. Bravo!"
—John Mauldin, President, Millennium Wave Investments

Product Details

ISBN-13:	9780470686027
Publisher:	Wiley
Publication date:	01/26/2010
Series:	Little Books. Big Profits , #35
Pages:	219
Sales rank:	501,780
Product dimensions:	5.30(w) x 7.10(h) x 4.10(d)

About 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 xi

Introduction This Is a Book About You 1

Chapter One In the Heat of the Moment 15

Chapter Two Who’s Afraid of the Big Bad Market? 21

Chapter Three Always Look on the Bright Side of Life 31

Chapter Four Why Does Anyone Listen to These Guys? 41

Chapter Five The Folly of Forecasting 57

Chapter Six Information Overload 73

Chapter Seven Turn off That Bubblevision! 87

Chapter Eight See No Evil, Hear No Evil 93

Chapter Nine In the Land of the Perma-Bear and the Perma-Bull 103

Chapter Ten The Siren Song of Stories 117

Chapter Eleven This Time Is Different 129

Chapter Twelve Right for the Wrong Reason, or Wrong for the Right Reason 145

Chapter Thirteen The Perils of ADHD Investing 153

Chapter Fourteen Inside the Mind of a Lemming 167

Chapter Fifteen You Gotta Know When to Fold Them 181

Chapter Sixteen Process, Process, Process 199

Conclusion The Road to Hell Is Paved with Good Intentions 213