Behavioural investing is a fascinating subject and James Montier points out how we are all susceptible to behaivoural issues, indeed we are hird wired for to do so. But by being aware and following many of James' rules we can avoid the common pitfalls and benefit from otheres inability to do so.
After wrestling somewhat with the compendious content of this rather meaty work, I was glad I had made the decision that I did. Montier's book is nothing if not comprehensive in its scope, and there's an abundance of research and other market data underpinning his conclusions about the impact of investor behaviour on the 'results'. Indeed, as an IFA/Financial Planner viewing the subject, the obvious strengths of the author's arguments had a lot to say about the way in which I had (in the past) carried out the whole business of providing investment advice.
It is unlikely that many individual investors would purchase this book - but having absorbed the content, it would seem appropriate for any investment professional to get a thorough grasp of the subject. I found the chapter entitled 'Part Man, Part Monkey', which deals with the commonest biases exhibited by investors to be enormously helpful. Furthermore, his critique of 'The Seven sins of Fund Management' was, I felt, bang on - and probably blows out of the water some 90% of what purports to be 'investment advice'.
If IFAs or financial planners are concerned about the dependability of what they deliver to their clients, in terms of their investment advice proposition, I would hope that this volume would be an extremely valuable resource. Certainly, within my own business (2020fs.co.uk), we have worked hard to learn these lessons when it comes to delivering value-added services to clients.
"Behavioral Investing" is a textbook that is also an excellent 'general read' on the subject. While the depth of coverage is possibly not appropriate for it to be considered as suitable for academic (research) work, it is suitable for an overall understanding of the subject. The book has a lucid, easy-to-follow coverage of the subject, with excellent examples on how human psychology and behavioral quirks influence our ability to take financial decisions. Indeed, the psychological insights appear to go beyond just 'financial' aspects, into general decision-making.
An amazingly well written book which both challenges the mind and is full of invaluable insights into stock trading. Some of the terms I have looked up on the internet as I was not sure of what CAPM was as the book does make assumptions as to some degree of knowledge. Having checked out the definitions of some terms I found the arguments within the material to fit around the terms which added further value to the lessons within. So far I have read around 2/3 of the book and am already developing my own stock screening process based upon the learning I have gained and am looking forward to learning more in the final third. An excellent read.