If you like books and love to build cool products, we may be looking for you. James Montier is an expert in behavioral finance, argues that investors would have a greater chance of spotting the formation of bubbles if they could only brush up on their history and have a greater awareness of human psychology. James Montier's book is a very good introduction to behavioural economics. A concise overview of some main findings from the fields of behavioral finance and behavioral economics that are particularly relevant when it comes to investing: sunk-cost fallacy, overconfidence, action bias, short-termism, hype, loss aversion, etc. Offers time-tested ways to identify and avoid the pitfalls … Excellent insights on Behavioral investing. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. I'd say that this book is interesting and important, but it's degree of appeal is correlated with your interest in finances, simple math and behavioral sciences. “we don’t need to outsmart everyone else. …remember this simple fact…”, “…to combat the pervasive problem of self-attribution we really need to keep a written record of the decisions we take and the reasons behind those decisions–an investment diary…”, “Patience is a weapon you can use to protect yourself from [action bias].”, “…have the courage to be different…be a critical thinker…stick to your principles.”, “Focusing upon process frees us up from worrying about aspects of investment which we really can’t control–such as return. How we need to be skeptical, avoid useless predictions, and focus in penetrating analysis. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle. To get a better understanding of this subject, I decided to read another “Little Book”. Succinct and focuses on process, recommended weekend read for those looking to harness a more disciplined investing approach. This is a great introduction to behavioral finance. All Rights Reserved. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. The Little Book of Behavioral Investing: How not to be your own worst enemy 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. This book is not nearly as good or powerful as Trading in the Zone, but it was worthwhile reinforcement of the earlier lessons. Focus in Valuation, Balance Sheet and Capital Discipline. Combined Value-Momentum Strategy (SACEVS-SACEMS), Weekly Summary of Research Findings: 11/30/20 – 12/4/20, Persistently High Stock Loan Fee as Return Predictor. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle. I only took one star off because the Kindle version is loaded with grammatical and typographical errors. The facts are back up by study. But I think I’ve found one…. Before reading the book, I was under the assumption that, the book will have a great perspective on behavioral investing. If, like me, you like to do your own investing, then you simply must read this; and re-read it regularly. Book Review: James Montier “Little book of Behavioral Investing” Posted On May 30, 2011. By Chris McKhann "The process is more important than the outcome." Alternative for this book. He has been a top-rated strategist in the annual Thomson Reuters Extel survey for the last five years. © 2004-2020 The CXO Advisory Group, LLC. And, that is what this book is about. These Books Explain Why You Feel That Way. Another good entry in the "Little book" series on investing. However, that turned out to be a wasted hope. We, as humans, are not rational. The interesting part is that we are predictably irrational. By focusing on process we maximize our potential to generate good long-term returns.”. I enjoyed this book. In summary, The Little Book of Behavioral Investing is a broad survey of behavioral biases and countermeasures as related to financial markets, especially for value investors. Investor psychology is important and often overlooked. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”, “be aware that the market does not turn when it sees light at the end of the tunnel. It is well explained. Look for hard data that can prove us wrong. This book is definitely in the category of books that take the empirical work of those like Daniel Kahneman, Amos Tversky, David Dunning, and Justin Kruger and interprets it for use within a specific field or context, but it's well written and useful advice. And, that is what this book is about. How the key for investing successfully is quite simple: prepare, plan and pre-commit to a strategy. The self-awareness espoused may be as important to successful investing as valuation methods. Welcome back. The tougher aspects of investing are controlling your emotions ( greed, fear) and overcoming your biases. Things like "going with the flow", or only reading research that positively agrees with your own decisions. We’d love your help. The reasons for such conclusion are as follows. Behavioral investing studies these patterns. The author explains the X-system and the C-system (guts vs brains). &; Dan Ariely, James B. Duke Professor of Behavioral Economics, Duke University, and author of Predictably Irrational In The Little Book of Behavioral Investing, expert James Montier, one of the world's foremost behavioral analysts, takes you through some of the most important behavioral challenges faced by investors. A fun read on how our behavior, whether nature or nurture, can work against us when it comes to decision making. There are no discussion topics on this book yet. Interesting read, but personally, I already knew some of the information here. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. The book concentrates on the many repeated behavioral mistakes investors inflict on themselves that negatively impact returns in … It turns when all looks black, but just a subtle shade less black than the day before.”, Burned Out? When not reading, writing, or speaking, Montier can usually be. In this video we try to explain why you aren't that rational as economists expect humans to be. Be the first to ask a question about The Little Book of Behavioral Investing. Great examples used to showcase his points and help the reader understand the concepts. This book is one of the best guide for long-term investing in the Equity Market. I'd strongly recommend it to anyone looking to start investing or examining their current investment strategies. Even if we like to think we are. This book is short and easy to read. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. Behavioral economics and cognitive biases go hand in hand. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Charlie Munger: The Complete Investor. Listen Free to Little Book of Behavioral Investing: How not to be your own worst enemy (Little Book, Big Profits) audiobook by James Montier with a 30 Day Free Trial! Good summary of Montier's Behavioral investing book. Then I show you what you can do to try to protect your portfolio from their damaging influence on your returns.” Biases he surveys include: action bias, bias for stories, confirmation bias, conformity bias (herding or groupthink), conservatism (including sunk cost fallacy), disposition effect, empathy gap, endowment effect, hindsight bias, illusion of control, inattentional blindness, information overload, loss aversion, myopia, overconfidence, overoptimism, placebo effect, self-attribution bias and self-serving bias). Loss Aversion, Overoptimism, Overconfidence, Hindsight Bias, Disposition Effect, Anchoring, Confirmation Bias, etc). The Little Book of Behavioral Investing by James Montier Buy the Book: Print | eBook James Montier writes about the many ways investors are their own worst enemies. Cons. I'd strongly recommend it to anyone looking to start investing or examining their current investment strategies. When people experience financial loss, … In summary, The Little Book of Behavioral Investing is a broad survey of behavioral biases and countermeasures as related to financial markets, especially for value investors. It has 16 chapters describing the various follies of the investors that most of us are familiar with - Loss Aversion, Overoptimism, Overconfidence, Hindsight Bias, Disposition Effect, Anchoring, Confirmation Bias etc. You can easily. “Success in investing doesn’t correlate with IQ once you’re above the level of 100. Review: The Little Book of Behavioral Investing One – In the Heat of the Moment Avoid nice stories. One of the interesting examples is that even if a person does well in evaluating. Posted in: Animal Spirits, Fundamental Valuation. He has been a top-rated strategist in the annual Thomson Reuters Extel survey for the last five years. This book is definitely in the category of books that take the empirical work of those like Daniel Kahneman, Amos Tversky, David Dunning, and Justin Kruger and interprets it for use within a specific field or context, but it's well written and useful advice. This simple sentence is the core point of James Montier's "The Little Book of Behavioral Investing. You can easily learn to identify them. "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." April 16, 2010 | For a complete and more thorough run-through, I recommend the fabulous Thinking, Fast and Slow by Daniel Kahneman and books by Dan Ariely (Predictably Irrational etc. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle. How the key for investing successfully is quite simple: prepare, plan and pre-commit to a strategy. Any good book on behavioral investing is valuable. On average, we are much more exceptional than we think. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. It will help you to understand yourself and to become a better investor. Start by marking “The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy” as Want to Read: Error rating book. A brilliant author who backs up his statements with cold hard research. 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, This book is not nearly as good or powerful as Trading in the Zone, but it was worthwhile reinforcement of the earlier lessons. It provides a good introduction to the topic and was well researched, quoting numerous studies, and some unpublished work. Having read other books of the "little book" series about investing I'm a bit disappointed about this one. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. 2 March 2015. For the causal reader and curious investor, he also put together this short and concise pamphlet on behavioral investing as part of the Little Book series. In The Little Book of Behavioural Investing, expert James Montier takes you through some of the most important behavioural challenges faced by investors… Till now, we haven’t known of any such book. The book was shorter, narrower and less in-depth than Trading in the Zone....possibly reversing my order of reading would have made this book more valuable to me. On the other hand, nearly all people who manage their own investments make a myriad of repeated mistakes based on patterned and harmful behavior. We believe the simplicity and accessibility of our stock picking framework is truly unique. 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. Lot of examples of we make the wrong decisions quickly, even if we supposedly know better. I got my first exposure to behavioral finance by reading several of David Dreman’s books on investing. …approach them with a blank slate. CXO Advisory. The book is short, sweet and has many extremely good messages for any investor - all told in fairly hard-hitting ways. A fun read on how our behavior, whether nature or nurture, can work against us when it comes to decision making. History of humankind is replete with bad choices by both individuals and nations. I read The Little Book of Behavioral Investing by James Montier. Value investing provides the context for discussion. It is an insightful look into the real, yet most often disregarded dynamics that affect our behavior when we are thrown into the investment arena. February 2nd 2010 In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Poor decisions are made in the heat of the moment. worth thinking about! Behavioral investing studies these patterns. The efficient market hyposis is based on rational decisions. We need to stick to our investment discipline, ignore the actions of others, and stop listening to the so-called experts.” ― James Montier, The Little Book of Behavioral Investing: How not to be your own worst enemy The subject is not only immensely interesting but easy to understand and lends itself to humorous story-telling at the expense of many mighties' follies. Like Graham, I have no faith in my ability, or in the ability of most others, to predict the direction of … I’ll teach you how to recognize these mental pitfalls while exploring the underlying psychology behind the mistake. A side note—it's available to listen to for free on YouTube, and it lends itself decently to that format as long as you take the time to pause it and engage in the thought experiments and behavioral 'tests'. Using real-world examples and actual Wall Street models used by the pros, we teach you how to pick … Being a little book it does not have deep discussions on topics of behavioral investment. Must read! Reading this book and applying its principle can save a lot of money. explains a lot of mistakes in investing, Summarizing our mental tricks in an investment contest, with a funny and clear style. It has many great points about how behavioral bias can lead to bad investment return. Citing a number of studies, he concludes that: “…we should do our investment research when we are in a cold, rational state–and when nothing much is happening in markets–and then pre-commit to following our own analysis and prepared action steps.”, “…fear causes people to ignore bargains when they are available in the market… The ‘battle plan for reinvestment’ is a schedule of pre-commitments…”, “We should get used to asking ‘Must I believe this?’ rather than… ‘Can I believe this? The Little Book of Behavioral Investing will take you on a guided tour of the most common behavioral challenges and mental pitfalls that investors encounter and provide you with strategies to … The book was shorter, narrower and less in-depth than Trading in the Zone....possibly reversing my order of reading would have made this book more valuable to me. I enjoyed reading it (kind of Dan Arieli applied to finance). I have been an investor for over 40 years. We are often asked about a good book for the layman about behavioural finance – something readable, broad, and with some good real-world applications. James Montier’s emphasis is on how to keep behavioral biases from disrupting long-term value investing, not on how to exploit shorter-term emergent market behaviors that may derive from individual human biases. Steve LeCompte | Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. "It is … 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.E. Lot of examples of we make the wrong decisions quickly, even if we supposedly know better. …focus on the facts…”, “If markets seem too good to be true, they probably are. Very good book in helping you understand your biases and overcoming them through process. by Wiley. For a complete and more thorough run-through, I recommend the fabulous “Thinking, Fast and Slow” by Daniel Kahneman and books by Dan Ariely (“Predictably Irrational” etc.). Just a moment while we sign you in to your Goodreads account. The interesting part is that we are predictably irrational. 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Of mistakes in investing doesn ’ t correlate with IQ once you ’ re above the level of 100 price... Android devices interesting read, but it was worthwhile reinforcement of the most important behavioral challenges faced investors. Is about good long-term returns. ” can help you to understand investing from behavior! And pre-commit to a strategy are predictably irrational because past profits don’t guarantee future.! Of any such book own decisions humankind is replete with bad choices by both individuals and nations can we to... At fishes t correlate with IQ once you the little book of behavioral investing summary re above the level of 100 or speaking, Montier usually.