The same James Montier from SG, now from GMO and the same . Started reading .
In a certain sense, his Books – these are collected excerpts from his work at SG. But, these are still full books. He writes, конечно хорошо, but as I understand it, Albert Edwards taught him.
Behavioral Finance Book, ie. about baes and about, how it prevents you from investing and, что собственно делать. Everything in general ordinary, but many references to work and research. Ie. if you know what kind of rabbit this is, you won't learn a lot, but meet the zest.
The following is the content and a short description of that, what is this section about.
Let's start with the conclusion of the book. Such is the thought. I am overweight. I know it. (By the way, почитайте «Mindless Eating» – Same, what have you just read about investments, but about food. Some solid baes). But my knowledge does not lead to better results.. And in general, people very often do not use knowledge. All in all, take care of yourself, friends.
1) In the Heat of the momentum
Empathy gap - inability to imagine your future feelings. For example, when we ate, it is very difficult for us to imagine the feeling of hunger. Emotional imagination works badly. The flip side of the thought is, что мы думаем, that will behave this way (rationally), in fact (especially when an unexpected stimulant appears) it turns out not at all as we expected it.
2) Who’s Afraid of the Big Bad Market?
Fear and greed. I present the game. Вы инвестируете 1$ on each coin toss for 100 once. Eagle - you still 2.5$, tails - your invested dollar is taken by the casino. Turns out, that depending on the results (for example, several losses in a row) people invest less often. Although, as we know, based on probabilities, take part in as many shots as possible. A plus, in this experiment, a group of people with a brain defect (damage to the area responsible for fear) invested more often than others.
3) Always Look on the Bright Side of Life
The section on Over-Optimism. Состояние, when we are overly confident in future success. Differs from Over -Confidence, comes from a combination of Illusion of Control and Self-attribution. Say, that Over-Optimism is a built-in survival tool and is needed for purely biological purposes. But, anyway, hope is not the best investment strategy.
4) Why does Anyone Listen to These Guys (Jim Cramer)
Yes, the subsection is called “Why are you listening to Kramer?». The idea is old and is, what the guys from the TV say confidently, and a person is just being led on confidence. An interesting comparison between meteorologists and doctors. The first Self-attribution Bias are significantly lower, чем у вторых. Question: well, who do the gurus look like? Of course on the second. (5 Kopeks: the closest analogue for the economy and the market is medicine).
5) The Folly of Forecasting
So why use predictions? By the way, forecast is also an anchor effect (anchor bias), therefore, considering the forecast as a force of attraction to reality is still a dubious occupation.. All in all, forecast is not for that, to "predict", this is for, to "prepare".
6) Information Overload
Standard idea: a lot of information is bad. With the growth of the information used, the effect of its usefulness decreases., and the level of confidence continues to grow at the same rate. I guess you can say so: new information has declining marginal utility. In the same time, the confidence gained when entering a new portion of information grows even at an accelerating rate.
7) Turn of That Bubblevision!
Turn off the TV. You are welcome! By the way, Summers (the one that Larry) was seen writing a work, in which they tried to compare whether the strongest market fluctuations were caused by at least some events. Was, which is not really.
8) See No Evil, Hear No Evil
See then, what to want to see. Basically Confirmation Bias. A very interesting story about Sir Roger Tichborne.
9) In the Land of thr Perma-Bear and the Perma-Bull
This is the problem of Conservatism. Just like the story of the broken watch, which show the correct time twice a day (от себя, I guess, added).
10) The Siren Song of Stories
When an event is linked to history, we treat him differently. Stocks with history are completely different stocks. (5 Kopeks: purely trader's "never fall in love with the stock")
11) This Time Is Different
Bubbles, these are not bubbles, а «Predictable surprises». At GMO they counted 30 pieces for 84 of the year. There is also such a thing, as "myopia" – it is focusing on the short term. Then they talk about the structure of the bubble according to Haimon Minsky's scheme. Turns out, Mil wrote almost the same thing, which is John Stewart.
12) Right for the Wrong Reason, or Wrong for the Right Reason
Chapter on Self-attribution Bias, in all its splendor.
13) The Perils of ADHD Investing
ADAH – attention deficit hyperactivity disorder. The second title explains well the content of the chapter.: Never Underestimate the Value of Doing Nothing. Simplified: excess body movements in trade - unnecessary problems. Goalkeeper example, penalties are hit by about 1/3 to each side and to the center. In this case, the goalkeepers jump to one of the sides to 94% cases. Having a short span of professional goalkeeper, I can confirm to stay in the center and skip to the corner - this is more shameful, than jumping all the time and skipping in the center.
14) Inside the Mind of a Lemming
It's hard to have the opposite opinion. It is in our nature that, that disagreement with the crowd is perceived by the body as a risk to survival, which causes physical pain. A few more words about the danger of groupthink. (5 Kopeks: there are three different levels of problems: crowd mistakes, mistakes of small groups and mistakes of individuals).
15) You Gotta Know When to Fold Them
Loss aversion even the capuchin monkeys have. Interesting examples of Loss aversion. How Buffett differs from his teacher. Ben had a maniche: found hatched sold, earned on convergence-divergence. Buffett found and sat down, if stocks don't overheat, then why sell them. Ie. in the first case, the exploitation of an incorrect market assessment, in the second, growth along with the growth of business. Something like this.
16) Process, Process, Process
There is an old wisdom about, that earnings cannot be controlled, only loss is possible. Montier writes, that this is also an illusion. The only thing, what can be controlled is a process. Ie. соблюдать правила, do not be stupid, ignore short-term results and everything will be fine.
