The Little Book of Behavioral Investing: How not to be your own worst enemy (Little Books, Big Profits (UK))

by James Montier

“The time of maximum pessimism is the best time to buy, and the time of maximum optimism is the best time to sell. ”

Sir John Templeton

fear causes people to ignore bargains when they are available in the market, especially if they have previously suffered a loss. The longer they find themselves in this position, the worse their decision- making appears to become.

“One of our strategies for maintaining rational thinking at all times is to attempt to avoid the extreme stresses that lead to poor decision-making.

Seth Klarman

Prepare—Don’t Predict

WHEN IT COMES TO INVESTING, WE SEEM TO BE ADDICTED TO INFORMATION. The whole investment industry is obsessed with learning more and more about less and less, until we know absolutely everything about nothing.

all the extra information wasn ’t making the bookmakers any more accurate, but it was making them increasingly overconfident.

Not only do we look for information that agrees with us, but we tend to see all information as supporting our hypothesis.

we need to learn to look for evidence that would prove our own analysis wrong.

investors get caught up in all the details and the noise, and forget to keep an eye on the big picture.

If markets seem too good to be true, they probably are.

as an individual investor you don ’t have to worry about career or business risk. This is your greatest advantage over the professionals.

If you can’t find something to invest in, then you are best off doing nothing at all.

“Holding cash is uncomfortable, but not as uncomfortable as doing something stupid.”

Warren Buffett