Investors behaving badly
Some views from around the Internet:
Although I’ve yet to start reading his book, instinctively I’m a fan of James Montier. He’s a behavioural investing expert who enjoys trashing conventional investment theory. Perhaps that’s because it’s a mathematical construct which tends to overlook the human factor.
Back in the real world everyone knows psychology drives markets.
Recently Mr [...]
Measuring your return (again)
There’s more than one way to crack a nut. And deciding the right method of performance measurement is proving a hard nut to crack.
Graeme’s shared a spreadsheet showing how he calculates time-weighted performance.
If you’re new to this discussion, it follows Monday’s post, How are you doing? In which I explained the money-weighted method I [...]
Creative analysis
It’s not just accountants that are creative, investors can be too. A not so new book shows you how.
Having read a few, I’ve come to the conclusion books on financial accounts aren’t meant to be read through, unless you’re the sort of person that likes reading dictionaries, telephone directories and parts-lists.
Sadly, another thing I can’t [...]
How are you doing?
Most investors grossly overestimate their abilities, which is one of the reasons they do so badly. Although the maths can be complicated, the individual investor can, and should, measure his performance.
No, seriously. How are you doing? Or, more specifically, how are your shares doing?
If you can tell me, you’re in the minority according to an [...]
CAPM is CRAP!
There is more to behavioural investing
According to James Montier, an expert in behavioural investing, one of the fundamental tenets of modern financial theory is empirically bogus. Is theory finally catching up with reality?
Right after I wrote Monday’s blog, which didn’t take a swipe at behavioural investing but at the conclusion often drawn from it, that emotions render homo investus neandarthalis [...]
Notes for entrepreneurial investors
Repeat after me: We’re not stupid. We don’t have to act like cavemen.
Joe Nocera, a journalist, says small investors are hapless:
Small investors spend hours on chat boards, where the herd mentality is fiercest. They can’t bring themselves to sell losing positions, even when the stock is still going down. They bet everything on one or [...]
Notable #1
Because one viewpoint is never enough, here’s some links to what I’m reading:
“Look at every opportunity that comes your way; know exactly what you’re buying; don’t be sentimental; and never pay too much.”
Rules, perhaps, that any business-minded investor should aspire to, and Gannett’s acquisition strategy as enunciated in a tribute to its former CEO, and Gannett lifer, Douglas H. McCorkindale in the company’s 2006 annual report. Gannett is, publisher of USA Today and countless regional newspapers and websites in the US and the UK. Although none of [...]
The six cheapest shares in the market
Dr Keith Anderson reveals the six cheapest shares in the market according to the Naked PER, a measure that promises superior returns.
This is the third of our quarterly updates on the cheapest six shares on the market, measured using the Naked Price Earnings ratio, and calculated by Dr Keith Anderson. The gist of Dr Anderson’s [...]
You. Investor. You’re a sucker
Academic theory suggests you can’t knowingly beat the stockmarket. Investors that do are just lucky, or crooked. The majority that don’t are suckers. It’s not true.
My nomination for top blog posting on another blog this year is this one: You, investor, are a sucker. It sent me into a bout of introspection that all investors [...]
