Behavioural Investing: A Practitioner's Guide to Applying Behavioural Finance (The Wiley Finance Series)

James Montier's book is in fact a collection of articles and therefore has some redundancies by repeating the same things again and again. But...he really takes away many illusions about analysts, company meetings, portfolio management and every one's capabilities in beating the market. In short, he says that predicting the future is not possible and that we are very bad in forecasting, even more when we are "professionals", because of how our brain works. He shows how to at least try to avoid common biases and focusing on the facts (on the past). It is easy to read and very entertaining, nevertheless with a factual approach. But be warned: as a PM you will feel the urge to stop taking calls from sales people ;-)

I think the criticisms found in the previous reviews are valid. The book is indeed just a collection of periodic notes that were sent to clients of J. Montier's employer, Dresdner Kleinwort. And this format is at times frustrating, since occasionally these notes reference previous ones, which the reader of the book has either no access to, or which are included on later pages of the book. At other times, the format leads to redundancies, as the same point will be reiterated in different client notes. But I could not get myself to take more than one star off, because the insights are so important, and the research presented to bolster them is very compelling. This is true both in terms of the psychological research underpinning the precepts of behavioural investing, and of the empirical research that shows the practical impact on asset prices. I would add to the criticisms that this book seems comparatively expensive, but I would say that in this case, you get what you pay for.

This is in my top 3 books, its a throughly orginial and well thoughtout book which outlines all the critical behavioural bias's that they we face as investors and offers some practical solutions for overcoming them. I believe that in order to outperform in today markets you need to combine technicals, fundamentals, an understanding of crowd pyschology and alos control your individual bias's.

Thought provoking and thorough !!

For a serious investor and trader even for analysts this book this is blessing to understand market behavior

James Montier, top ranked investment strategist at - in turn - Dresdner Kleinwort, Société Générale and GMO, is probably the most important apostle of behavioural finance there is and as such, should be mentioned right beside names such as Daniel Kahneman, Richard Thaler or Robert Shiller. For many investment professionals James Montier "is" behavioural finance. It's largely through Montier that concepts like anchoring, hindsight bias, herding etc. has found their way into the phrasebook of many portfolio managers. Even though investing is an intellectual endeavour most investors, as in fact most people, stop to improve their theoretical skills when they leave university thinking that when they enter the real world theory doesn't really matter - "Those who can, do; those who can't, teach." This then means that their knowledge gradually becomes obsolete. Too few read books, instead the source of information is papers from investment banks. Hence there is a need for a bridge between theoretical advances and investment practitioners. For behavioural finance Montier has been this bridge and a whole generation of investment professionals is wiser as a result. This is Montiers second book. The first one builds on a number of lectures in behavioural finance held as a visiting professor at university. This second (but also the author's third) book is really a collection of essays written while working as a sell side strategist. The essays are grouped after subject. My only objection is that it could have benefited from at least a small amount of editing. This is a very minor complaint. To me these essays are like old dear friends and I have read them over and over, even before they were published in a book. In such a way, editing would also have taken something away for me personally. Behavioural Investing is rather an extensive book and large parts are devoted to both individual irrationality and collective behaviours and the bubbles those can create. In the introductions to his first book, Behavioural Finance, the author describes how he left university a devoted rational expectations-man. Perhaps it is his later conversion that gives Montier the enthusiasm and drive to try to make everybody see the same truth as he saw himself. Everything Montier writes is well researched, clever, unpretentious (with a twist of dry British humour), entertaining and above all important. But the content in these sections isn't too different from any academic text book on behavioural finance - just a lot more fun to read. The real strength of the author is when he combines his knowledge of institutional investors and his theoretical knowledge, i.e. when the sell side strategist Montier looks at his own clients with his behavioural finance-goggles. Irrational illusions of how things should be done are exposed for all to see. To an outsider it is perhaps hard to realize how controversial these essays were with investment banks at start as they pointed to "faults" among Montier's clients. The clients however loved them and "The Seven Sins of Fund Management" is a classic paper. With investors as audience, what you write have to come to practical use and Montier gives extensive advice on how investment philosophy and process, organisation and incentives could be used to correct the biases investors exhibit. This could relate to anything from how they should view risk and minimize the use of forecasts to the opinion that they should become value investors. Montier in many ways gives a behavioural finance foundation for the value investing discipline. I have long held the view that Montier and Michael Mauboussin at Legg Mason should be locked up in a room, not to be let out until they agree to co-write a book on investments. This should have the potential to become the definitive book on investments of all times. This is a review by eqtbooks.com

This book is a collection of short notes about psychology, investment strategy and finance. Some chapters are original, but most of them were written as Equity Strategy weeklies for clients of James Montier's then employer (Dresdner Kleinwort Benson). I had already read a few of them, including the famous one about happiness and money, which everyone in the market has read, and which I preciously retain for consultation on the gloomy days when my portfolio loses more than 1%. The notes are unedited and presented thematically, not chronologically, which is sometimes confusing. There is some repetition between chapters, and several chapters assume prior knowledge not exposed in the book, which makes the discourse not very user friendly at times. You need to have some experience of investment to benefit fully from it. Overall the book is well written: clear, clever, entertaining and unpretentious, as is appropriate from a broker writing to clients - unlike, for instance, the unsufferably arrogant tone of Nassim Taleb, who writes on similar subjects and who, incidentally, is favorably mentioned in this book. Both Montier and Taleb define themselves as skeptical empiricists (or was that empirical skeptics ?) It reads rather quickly despite the number of pages: each chapter is preceded by a caption and a summary, which means that everything is repeated three times, and charts and graphs take up a lot of space. The book covers a lot of ground in psychology, investment process, investment strategy and ethics, including commentary on the latest research in those fields and extensive quotations from the 30s, notably from "the Masters" Keynes and Ben Graham. However, it is not really "a practitioner's guide to applying behavioural finance" since Montier's (sound) investment advice is not really based on psychology. The last parts, on ethics and happiness, are particularly original in an investment context. A higly recommended alternative to Taleb's forgettable Black Swan.

Sent this book back as soon as i got it! It is to long, not very informative and there are so many better books of behavioral finance an economics.

Was hat Spekulation an der Börse mit angeborenen Verhaltensmustern zu tun ? Wie entstehen Massenphänomene ? Mit welchen immer wiederkehrenden Fehlern werden weltweit Vermögen vernichtet ?? Dieses Buch gibt viele Antworten. Der Schreibstil von James Montier (einige Fianzprofis sollten seine bissigen Strategiepapiere durch die Societe Generale kennen) trieft von Sarkasmus. Es ist ein Erlebnis, sich selbst immer wieder im vorgehaltenen Spiegel zu erkennen. Trotz des nicht ganz einfachen Englisch ist das Werk ein lehrreicher Hochgenuss.

I bought this somewhat daunting tome, rather than the smaller, and considerable cheaper "The Little Book of Behavioural Investing" ( The Little Book of Behavioral Investing: How not to be your own worst enemy (Little Book, Big Profits) by the same author. 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.

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.

Excellent Product. I like it. Thank you.