Top critical review
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Good book on investment discipline/philosophy (only)
on 14 October 2011
I think of this book as a useful aide in staying focussed on getting through a possible worst case scenario so as to be able to buy risk assets when there is massive pessimism & the tabloids are pronouncing the end of capitalism & have financial news on the front pages.
As other reviewers point out, it is all about flipping the mind set to buy low(er) & then either activate a buy & hold & rebalance strategy or just sell (all or part) higher.
This requires that scary combination of missing out by being invested too early in government bonds/cash/money market & then being prepared to come in on 25%+ (or some other arbitrary trigger) falls in equities trusting in eventual mean reversion.
The author just takes you through how he arrived at thinking like this, there aren't any tips or action plan, it's a genuinely thoughtful call to 'stand back, be fearful when everyone else is greedy, be greedy when everyone's fearful, the big money is made by investing when there is blood on the streets, sometimes you're going to be years stuck in cash/money market/bonds & when you do come in you'll near certainly be too early, so get the mindset right'.
It is not really new or groundbreaking, it's in the long line from Loeb through to Buffett who like to stay out in manias & come in when the probabilities are in their favour. But I'd recommend it from an investment psychology/perspective, particularly for those who, perhaps alongside a 'drip feed into equities' strategy or a 60:40 or 50:50 risk:non risk rebalancing portfolio strategy, want to play a contrarian or value game with a portion of their capital. It is also a good antidote to the momentum or trend following strategies that seem to be in vogue right now.