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

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

by James Montier
Released January 2010
Publisher(s): Wiley
ISBN: 9780470686027

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Book description

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

Table of contents

  1. Little Book Big Profits Series
  2. Title Page
  3. Copyright Page
  4. Dedication
  5. Foreword
  6. Introduction
    1. The Most Important Lesson of All
    2. The Power of Star Trek
    3. So, Are You Spock or McCoy?
    4. X Unchecked
  7. Chapter One - In the Heat of the Moment
    1. The Perils of Procrastination
    2. The Power of Pre-Commitment
  8. Chapter Two - Who’s Afraid of the Big Bad Market?
    1. Brain Drain and Performance
    2. The Cure for Temporary Paralysis
  9. Chapter Three - Always Look on the Bright Side of Life
    1. Optimism and the X-System
    2. Nature versus Nurture
    3. Beating Over-Optimism
  10. Chapter Four - Why Does Anyone Listen to These Guys?
    1. Why Does Anyone Listen to Jim Cramer?
    2. The Shocking Dangers of Doing What We Are Told
    3. Fund Managers: Weathermen or Doctors?
    4. Overconfidence May Be Hazardous to Your Wealth
  11. Chapter Five - The Folly of Forecasting
    1. So, Why Do We Keep Forecasting?
    2. Why Do We Use Forecasts?
    3. There’s Got to Be a Better Way
  12. Chapter Six - Information Overload
    1. Is More Better?
    2. When Less Is More
    3. From the Emergency Room to the Markets
  13. Chapter Seven - Turn off That Bubblevision!
    1. Meet Mr. Market
  14. Chapter Eight - See No Evil, Hear No Evil
    1. The Sorry Tale of Sir Roger
    2. Prisoners of Our Preconceptions
    3. Kill the Company
  15. Chapter Nine - In the Land of the Perma-Bear and the Perma-Bull
    1. Hanging onto Your View
    2. Sunk Costs at the Root of Conservatism
  16. Chapter Ten - The Siren Song of Stories
    1. Stock Market Stories
    2. Beware of Capitalizing Hope
    3. Focus on the Facts
  17. Chapter Eleven - This Time Is Different
    1. Why Can’t We Time Predictable Surprises?
    2. A Beginner’s Guide to Spotting Bubbles
    3. Your Edge Over the Pros!
  18. Chapter Twelve - Right for the Wrong Reason, or Wrong for the Right Reason
    1. It’s Not My Fault, It’s Just Bad Luck
    2. Don’t Be a Monday Morning Quarterback
  19. Chapter Thirteen - The Perils of ADHD Investing
    1. What Can We Learn from Goalkeepers?
    2. Poor Performance Increases the Desire to Act
    3. Investors and Action Bias
    4. Waiting for the Fat Pitch
  20. Chapter Fourteen - Inside the Mind of a Lemming
    1. The Pain of Going against the Crowd
    2. The Carrot of Conformity
    3. The Dangers of Groupthink
    4. Alone in a Crowd of Sheep
  21. Chapter Fifteen - You Gotta Know When to Fold Them
    1. We Are Not Alone (or Perhaps Not Even That Evolved!)
    2. Myopia and Loss Aversion
    3. Why You Can’t Bring Yourself to Sell
    4. The Endowment Effect
  22. Chapter Sixteen - Process, Process, Process
    1. The Psychology of Process
    2. Process Accountability
  23. Conclusion

Product information

  • Title: The Little Book of Behavioral Investing: How not to be your own worst enemy
  • Author(s): James Montier
  • Release date: January 2010
  • Publisher(s): Wiley
  • ISBN: 9780470686027