the little book of behavioural investing

Review From User :

Short and deep. Great lecture.

Take away:

Why should i own this investment
Learn to say no!

Stick to your investment discipline.

"Analysis should be penetrating non prophetic" B. Graham

Focus on what really matters to make a decision

Look for info against your hypothesis (falsification) WRITE IT DOWN. George Soros diary.

B.Berkowitz "kill the company ":
1- No cash generation
2-Burn cash
3- Over leveraged
4- Play Russian Roulette
5- Management, bad or idiots.
6- you De-worsify
7- Buy stock too high
8- Accounting fraud.

Sunk cost: Hard to change what we adquired with efforts.
Use a Blank sheet of paper, start over!! ("Sell all!! M Steinhardt)
Present thesis to colleagues.
Devil's advotate: present negative case.

Good story & Siren Songs: FOCUS ON COLD HARD FACTS!!

Take the big picture.

" If something can't go on for ever, it won't." Herb Stein

analyze results: right for the good reason Luck

Wait, just wait.

Ted Williams Red Sox player 0.344% carrer batting average:
He divided strike zone into 77 cells of the size of baseball.
He ONLY would swing within best cells--> CIRCLE OF COMPETENCE.
Until then, wait in cash. DO NOTHING.

Hurts not following herds. Social exclusion. Feeling of Shunned.

Groupthinking symtoms:
1- Illusion of invulnerability
2-Collective rationalization
3- Belief in inherent morality
4- Stereotyped views of out-groups.
5- Direct pressure on dissenters.
6- Self-censorship
7- Illusion of unaminity
8- Mind guards . Police's group. Journals.

Be independent thinker BUT! understand the market.

Endowment effect: you value more what you own just for the fact of owing it!


Your worst enemy: YOURSELF.

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