The Little Book of Behavioral Investing
by James Montier
Montier catalogs the biases that destroy investment returns, overconfidence, confirmation bias, loss aversion, herding, action bias, and gives a defense for each: checklists, pre-commitment, process over outcome, and patience. It is short, witty and applies to any decision-maker, not just investors.
Read it if…
you want to understand how your own psychology loses you money and what to do about it.
Skip it if…
you want a strategy; this is about defending one.
Three things you will actually use
- Process over outcome; you control one.
- Pre-commit; decide the rules before the emotion.
- Do nothing more often; action bias costs.
Do this first
Write an investment checklist of five questions and use it before every decision for three months.
Our verdict
Short, sharp and widely applicable.
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