Posts filed under “Psychology”

Seven Sins of Fund Management

There is a terrific PDF (warning — its 105 pages) on the Seven Sins of Fund Management. It is a behavioural critique by James Montier, the Global Equity Strategist of Dresdner Kleinwort Wasserstein, and its full of all sorts of smart observations, backed up with data and charts.

I haven’t read prior work of Mr. Montier — but this PDF made me interested in his book, "Behavioural Finance: A User’s Guide."

I may be  referencing parts of the PDF in the future, but if you want an overview, here are the 7 Deadly Sins

Sin 1 Forecasting
The folly of forecasting: Ignore all economists, strategists & analysts
Do analysts understand value: who is the greater fool?

Sin 2 The illusion of knowledge
The illusion of knowledge, or is more information better information?

Sin 3 Meeting companies
Why waste your time listening to company management?

Sin 4 Thinking you can out-smart everyone else
Who’s a pretty boy then? Or beauty contests, rationality and great fools

Sin 5 Short time horizons and overtrading
ADHD, time horizons and underperformance

Sin 6 Believing everything you read
The story is the thing, or the allure of growth
Scepticism is rare, or, Descartes vs. Spinoza

Sin 7 Group decisions
Are two heads better than one?



Seven Sins of Fund Management
James Montier
Dresdner Kleinwort Wasserstein, November 2005

Category: Investing, Psychology

New Column: The Street Gets Inflation Threat Backwards

Category: Employment, Federal Reserve, Inflation, Investing, Markets, Psychology

State of the Union: Not Very Happy

Category: Politics, Psychology

Jobs & Wage Data: the “Nuanced Economy”

Category: Data Analysis, Employment, Inflation, Psychology

A Full Year of Panic ? (I don’t think so)

Category: Psychology

New Column: Monitoring the ‘Mad Money’ Madness

Category: Psychology

Thin Green Line

Category: Apprenticed Investor, Psychology

The Speculative Sap is Rising

Category: Markets, Psychology

The Astonishingly Inefficient Market

Category: Apprenticed Investor, Markets, Psychology, Technical Analysis

Top Ticking Real Estate is Different Than Stocks

Category: Investing, Markets, Psychology, Real Estate, Trading