Buy the Book: Fred C. Kelly figured out that behavior plays a bigger part in investor success than most thought. That he did so in 1930, says a lot about how little human nature changes. Kelly proposed that by acting counter — contrarian — to the general tendencies of most market participants, one avoids most typical mistakes, and succeeds at investing. Studying average investor mistakes presents a guide to future dangers.
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The Little Book of Behavioral Investing by James Montier
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James Montier writes about the many ways investors are their own worst enemies. The book concentrates on the many repeated behavioral mistakes investors inflict on themselves that negatively impact returns in the process.
The Notes
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Why Don’t We Learn From History? by B.H. Liddell Hart
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B. H. Liddell Hart wrote the book as a summary of the history of warfare. Rather than writing the lessons we learn from history, he inverts the message to the many lessons we fail to learn from history.
The Notes
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Lessons from a 300 Year Old Book on Markets
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The earliest known book describing any stock exchange was written in 1688. Aptly titled, Confusion of Confusions, Joseph de la Vega describes stock and options trading (mostly of Dutch East India Company stock) on the Amsterdam stock market through a conversation between Shareholder, Merchant, and Philosopher.
The book is a defining example of how little markets have changed in over three centuries. From the early reference to the game and its primary players to the scheming and manipulation to the influential emotions of greed, fear, and panic, the lessons are old, yet still relevant today.
It starts with a fitting description of stock markets: Continue Reading…
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Quarterly Reading – Winter ’19
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It’s time for another quarterly reading update (these updates are mostly for my own accountability, but if you find something that interests you, great). Several projects ate into reading time, which meant fewer books over the past three months. The plan is to get back into it in 2019.
Here’s what I’ve been reading over the past quarter: Continue Reading…
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Stan Druckenmiller’s Worst Mistake Ever
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One of the best ways to learn about investing is through second-hand experience by learning what not to do from the mistakes of others. It’s the most cost-effective, resource-abundant way to learn since history is filled with other people’s mistakes. The other option is first-hand. It’s expensive but stickier — less easily forgotten.
There’s one downside though. Knowing won’t make you immune from repeating it. All the information in the world is useless when emotions drive decisions.
Take Stan Druckenmiller.
He’s arguably one of the best investors ever. He averaged 30% per year over a 30-year career, with no losing year. And he once turned a $1 million donation to a school, invested over five years, into a $35.6 million windfall.
A return like that is not easy. It requires taking extremely concentrated bets with a lot of leverage and most importantly an openmindedness to change your mind when you’re wrong. Continue Reading…
Buy the Book: 
Buy the Book: