Book Review: The Little Book of Behavioral Investing June 14, 2011 James Montier’s addition to the “Little Book” series on investing could have been on practically any topic; however, his focus on investor psychology and his grasp on human irrationality in investing made him the clear candidate for the behavioral portion of the collection. Cons. …approach them with a blank slate. All Rights Reserved. Focus in Valuation, Balance Sheet and Capital Discipline. Here are 3 lessons about the power of index funds: Actively managed funds suck, because past profits don’t guarantee future success. It provides a good introduction to the topic and was well researched, quoting numerous studies, and some unpublished work. 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 In this video we try to explain why you aren't that rational as economists expect humans to be. James Montier's book is a very good introduction to behavioural economics. Like Graham, I have no faith in my ability, or in the ability of most others, to predict the direction of … 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. 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. Start by marking “The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy” as Want to Read: Error rating book. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. “we don’t need to outsmart everyone else. 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. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. He has been a top-rated strategist in the annual Thomson Reuters Extel survey for the last five years. 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. Book Review: James Montier “Little book of Behavioral Investing” Posted On May 30, 2011. Poor decisions are made in the heat of the moment. © 2004-2020 The CXO Advisory Group, LLC. 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. Having read other books of the "little book" series about investing I'm a bit disappointed about this one. Another good entry in the "Little book" series on investing. 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. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. One of the interesting examples is that even if a person does well in evaluating a series of one certain kind of math questions, there are other types of questions to which they will be susceptible in choosing the wrong answer. This could be regarded as a short summary of behavioral economics. 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. Investor psychology is important and often overlooked. In The Little Book of Behavioral Investing, behavioral finance expert James Montier takes you on a guided tour of the most common behavioral challenges and mental pitfalls that investors encounter, and provides you with strategies to eliminate these traits. It turns when all looks black, but just a subtle shade less black than the day before.”, Burned Out? I'd strongly recommend it to anyone looking to start investing or examining their current investment strategies. 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.). This book is one of the best guide for long-term investing in the Equity Market. 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. Welcome back. If there is a take-away it might be to make fact based decisions and to slow down (if possible) in that decision making. History of humankind is replete with bad choices by both individuals and nations. 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. By Chris McKhann "The process is more important than the outcome." And, that is what this book is about. Avoid nice stories. The reasons for such conclusion are as follows. …play a game of devil’s advocate…”, “…what can we do to guard against the siren song of stories? 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. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle. Avoid a burden of information that only provides confidence but not knowledge. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. One of the interesting examples is that even if a person does well in evaluating. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Value investing provides the context for discussion. How the key for investing successfully is quite simple: prepare, plan and pre-commit to a strategy. The efficient market hyposis is based on rational decisions. '”, “…stop listening to the so-called experts.”, “All investors should devote themselves to understanding the nature of the business and its intrinsic worth…once you reject forecasting for the waste of time that it is, you will free up your time to concentrate on the things that really matter.”, “We would be far better off analyzing the five things we really need to know about an investment, rather than trying to know absolutely everything about everything concerned with [it].”, “Turning off the bubblevision is a great step towards preventing yourself from becoming a slave to the market.”, “…we need to learn to look for evidence that would prove our analysis wrong. Till now, we haven’t known of any such book. April 16, 2010 | Steve LeCompte | The author explains the X-system and the C-system (guts vs brains). The book concentrates on the many repeated behavioral mistakes investors inflict on themselves that negatively impact returns in … Any good book on behavioral investing is valuable. The Little Book of Investing Like the Pros was written to fill this void. Succinct and focuses on process, recommended weekend read for those looking to harness a more disciplined investing approach. 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. Stream and download audiobooks to your computer, tablet and iOS and Android devices. In The Little Book of Behavioural Investing, expert James Montier takes you through some of the most important behavioural challenges faced by investors… 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. 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. I have been an investor for over 40 years. It's all based on the Little Book of Behavioral Investing, written by James Montier. Gain access to hundreds of premium investing research articles and CXO's trading strategies, Stock Option Momentum and SeasonalityDecember 9, 2020, Are Currency Carry Trade ETFs Working?December 8, 2020, Stock Market Valuation Ratio TrendsDecember 7, 2020, Weekly Summary of Research Findings: 11/30/20 – 12/4/20December 4, 2020, Rough Net Worth Growth BenchmarksDecember 4, 2020, Persistently High Stock Loan Fee as Return PredictorDecember 3, 2020, Do ETFs Following Gurus/Insiders Work?December 1, 2020, Objective research to aid investing decisions. Things like "going with the flow", or only reading research that positively agrees with your own decisions. And, that is what this book is about. James Montier’s examples of “how some of the world’s best investors have striven to develop investment processes that minimize their behavioral errors” are incomplete in a research sense, arguably more story-like than research-like. Goodreads helps you keep track of books you want to read. By focusing on process we maximize our potential to generate good long-term returns.”. This is a great introduction to behavioral finance. I only took one star off because the Kindle version is loaded with grammatical and typographical errors. Posted in: Animal Spirits, Fundamental Valuation. 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 simple sentence is the core point of James Montier's "The Little Book of Behavioral Investing. I’ll teach you how to recognize these mental pitfalls while exploring the underlying psychology behind the mistake. “Success in investing doesn’t correlate with IQ once you’re above the level of 100. 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. 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. The interesting part is that we are predictably irrational. Refresh and try again. 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 … Review of "The Little Book of Behavioral Investing: ... Summary. To get a better understanding of this subject, I decided to read another “Little Book”. You can easily. When people experience financial loss, … A brilliant author who backs up his statements with cold hard research. The interesting part is that we are predictably irrational. How we need to be skeptical, avoid useless predictions, and focus in penetrating analysis. Last year, Buzzfeed culture writer Anne Helen Petersen struck a chord with her viral article “How Millennials Became the Burnout Generation.”... To see what your friends thought of this book, The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy. ), This could be regarded as a short summary of behavioral economics. On top, he is a great thinker and has experience to boot. It's written in a light, fun style with quotable quotes and lots of examples. 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. Before reading the book, I was under the assumption that, the book will have a great perspective on behavioral investing. 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 tougher aspects of investing are controlling your emotions ( greed, fear) and overcoming your biases. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. 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'. A excellent work by the author.Some of the mental pitfall and how to guard yourself against it.Examples are excellent and Although i have not read much book on behavioral economics but i think they all have almost same type of bias with different example. I'd strongly recommend it to anyone looking to start investing or examining their current investment strategies. 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. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Loss Aversion, Overoptimism, Overconfidence, Hindsight Bias, Disposition Effect, Anchoring, Confirmation Bias, etc). The book is short, sweet and has many extremely good messages for any investor - all told in fairly hard-hitting ways. Look for hard data that can prove us wrong. Lot of examples of we make the wrong decisions quickly, even if we supposedly know better. 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). &; Dan Ariely, James B. Duke Professor of Behavioral Economics, Duke University, and author of Predictably Irrational Offers time-tested ways to identify and avoid the pitfalls … If, like me, you like to do your own investing, then you simply must read this; and re-read it regularly. "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." …focus on the facts…”, “If markets seem too good to be true, they probably are. I enjoyed this book. Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle. We, as humans, are not rational. A great book to understand investing from human behavior point of view! We are often asked about a good book for the layman about behavioural finance – something readable, broad, and with some good real-world applications. Simple rules, like taking the current market price and back out what it implies for future growth. In his 2010 book entitled The Little Book of Behavioral Investing: How Not to Be Your Own Worst Enemy, author James Montier states: “I…highlight some of the most destructive behavioral biases and common mental mistakes that I’ve seen professional investors make. 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. It will help you to understand yourself and to become a better investor. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. We believe the simplicity and accessibility of our stock picking framework is truly unique. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. History of humankind is replete with bad choices by both individuals and nations. If you like books and love to build cool products, we may be looking for you. A side noteit's available to listen to for free on YouTube, and it lends itself decently to that format as long as you take the. Interesting read, but personally, I already knew some of the information here. Alternative for this book. Behavioral investing studies these patterns. When not reading, writing, or speaking, Montier can usually be. I read The Little Book of Behavioral Investing by James Montier. Excellent insights on Behavioral investing. How the key for investing successfully is quite simple: prepare, plan and pre-commit to a strategy. He has been a top-rated strategist in the annual Thomson Reuters Extel survey for the last five years. On the other hand, nearly all people who manage their own investments make a myriad of repeated mistakes based on patterned and harmful behavior. The facts are back up by study. February 2nd 2010 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! Lot of examples of we make the wrong decisions quickly, even if we supposedly know better. In The Little Book of Behavioral Investing, expert James Montier takes you through some of the most important behavioral challenges faced by investors. Even if we like to think we are. These Books Explain Why You Feel That Way. Then comes the hard part....overcoming ones natural inclination to fall into the same harmful patterns time and time again when the pressure is on. I got my first exposure to behavioral finance by reading several of David Dreman’s books on investing. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. If there is a take-away it might be to make fact based decisions and to slow down (if possible) in that decision making. Being a little book it does not have deep discussions on topics of behavioral investment. by Wiley. explains a lot of mistakes in investing, Summarizing our mental tricks in an investment contest, with a funny and clear style. This book is elaboration of point discussed by famous investor Charlie Munger in his lecture titled ‘ Psychology of Human Misjudgment ‘. It all begins with the most overwhelming fact that Montier is a great writer. The author explains the X-system and the C-system (guts vs brains). Charlie Munger: The Complete Investor. This book is short and easy to read. I enjoyed reading it (kind of Dan Arieli applied to finance). When not reading, writing, or speaking, Montier can usually be found swimming with sharks and blowing bubbles at fishes. 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? This book is not nearly as good or powerful as Trading in the Zone, but it was worthwhile reinforcement of the earlier lessons. It has many great points about how behavioral bias can lead to bad investment return. A fun read on how our behavior, whether nature or nurture, can work against us when it comes to decision making. worth thinking about! Great examples used to showcase his points and help the reader understand the concepts. The self-awareness espoused may be as important to successful investing as valuation methods. The book is titledThe Little Book of Behavioral Investing: How not to be your own worst enemy (Little Book, Big Profits) and was released on February 2, 2010. There are no discussion topics on this book yet. This is a very interesting book about human behaviour, biases, how our brains make mistakes and the consequences in investing. Highly recommended for everyone who wishes to invest in the markets. Let us know what’s wrong with this preview of, Published 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. Very good book in helping you understand your biases and overcoming them through process. Must read! Reading this book and applying its principle can save a lot of money. 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. Bogle’s invention, the index fund, is still one of the safest and stress-free ways of investing today and in this little book he outlines why, and how you can get started with one. It reveals our "bad thinking" commonly used by even the best investment fund managers. Be the first to ask a question about The Little Book of Behavioral Investing. Just think of impulse buying at your... Two – Who’s Afraid of the Big Bad Market? 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. Review: The Little Book of Behavioral Investing One – In the Heat of the Moment Behavioral finance, which recognizes that there is a psychological element to all investor decision-making, can help you overcome this obstacle. Book name: The little book of behavioral investing Author: J. Montier ISBN: 978-0-470-68602-7 Pages: 219 Publisher: John Wiley & Sons, Inc. Year of publishing: 2010 Book … Though this book is couched in the world of individual investment, it is primarily a catalog of the cognitive biases to which we fall prey in many arenas: politics, personal habits, evaluating truth in a time of over- and dis-information. CXO Advisory. You can easily learn to identify them. 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 economics and cognitive biases go hand in hand. Montier reveals the most common psychological barriers, clearly showing how emotion, overconfidence, and a multitude of other behavioral traits, can affect investment decision-making. 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. But I think I’ve found one…. On average, we are much more exceptional than we think. I only read this because I legitimately had nothing else to read and this was given to me at QWIL in second year from Burgundy. …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. Ios and Android devices bad thinking '' commonly used by even the best investment managers. The day before. ”, Burned out outcome. Hindsight Bias, Disposition Effect, Anchoring, Confirmation Bias etc. A question about the Little book of behavioral investing by James Montier “Little book of behavioral,! 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