This is a must read for investors if you want to get more familiar with common biases.
I stumbled over the book reading through Vitaliy Katsenelson’s reading list. It promised to be about biases – an integral part of investing. For long-term success as an investor I believe it is important to be aware of biases. Further, I enjoyed reading about biases in other books (see here and here).
I loved the book. It introduces the reader to many biases. The author often introduces the bias in a situation outside of the field of investing (I want to believe for a better, general understanding) and later explains where it is present within the realm of investing. Often, the author provides possible solutions for the biases (from other investors).
Illustrating the ‘shocking’ authority bias, the author shared an experiment in which participants ordered or executed themselves electro shocks to other persons, in a realistic setting. A person wearing a gown seems to be enough. After reading the chapter, it became much more imaginable to me how people follow politicians (authority) into stupid war(s).
The key lesson from the book is that we must concentrate on and implement a good investment process. Otherwise, we will fall victim to many of the prevailing biases and become our own worst enemey again.
As usual, I bought the kindle edition. A coice I questioned again. On the one hand, it is easy to transport (all books in a device) and to read anywhere, I in the bed without much other light. On the other hand, working in the paper-book (highlighting, adding bookmarks) might have benefits. And adding the book to a book-shelf might be nice. (sometimes being envious during investing-related calls). How do you think about the choice kindle or paper book ?