7 Mistakes Every Investor Makes (And How To Avoid Them) by Joachim Klement -- Read -- Imperial Library of Trantor

Index

Contents About the Author Acknowledgements Introduction, or How a Relay of Misery Can Lead to Good Things

Let me take you on my journey My selection of the seven most common mistakes

Chapter 1: The Shortest Investment Joke: My Forecast Has a Decimal Point

The future is uncertain – deal with it It gets worse… The uncertainty introduced by compound interest Increasing uncertainty More isn’t more: information versus accuracy The true value of company analysis Resist the temptation to summarise everything into one number Integrating uncertainty into the investment process A better way to deal with uncertainty Main points References

Chapter 2: The Long Term is Not the Sum of Short Terms

Let’s blame the media, shall we? The media is a symptom, not the cause Short-termism is bad for your wealth Finding excuses for trading is easy Don’t just do something, sit there Don’t check your portfolio too often Professionals need to have the right incentives How you visualise performance matters Manage your information flow Main points References

Chapter 3: Are You a Long-term Investor – or Just Stubborn?

Contrarian investing for the long run Contrarian investing versus momentum investing Value investing for the long run A cautionary tale Learning from short-term investors The secret of successful traders: emotional detachment Listen to the data to rein in your emotions A mental model of data aggregation Embrace stop-losses Main points References

Chapter 4: We Learn From History That We Do Not Learn From History

Learning from experience in a laboratory Trading begins and chaos ensues… Cynical bubbles and bubble echoes Bubble echoes in the wild Forgetting past experiences: rekindling a bubble Career risk as an obstacle to learning from experience Most fund managers get worse with experience Individual investors don’t learn from the past either Learning from experience Main points References

Chapter 5: Ignoring the Other Side of a Story

The outcomes for investors were vastly different A crucial mistake We don’t like to be contradicted Test your confirmation bias The allure of growth The safety of value Economic growth and stock returns Engage with views you disagree with Change your reading habits Your new best friend: the devil’s advocate Main points Free investment blogs References

Chapter 6: You Get What You Pay For

Active fees for passive funds Why are fund managers becoming less active? A very public failure An alternative way to lose money for investors The impact of lower tracking error on investment performance Incentives matter Employee-owned funds perform better So do smaller funds A 1960s advertisement explains the advantage of smaller funds How to improve your investment performance Active share isn’t everything Small, active and employee owned Main points References

Chapter 7: Navigating a Complex World

Why doesn’t Delphi own the world? A recent regime change in currency markets Currency hedge funds stop performing The flawed foundations of modern finance Financial markets as complex dynamic systems Insights from complex dynamic systems How to think about markets as systems Main points References

Chapter 8: Over To You

Get to know yourself Improve yourself My rules for forecasting Never stop learning

Publishing details