*****David Blair, The Crosshairs Trader, is a blogger/trader/educator who does a wonderful job of sharing research on elite performance and how it relates to trading. Below is his latest post for the SMB trading community.***** — Editor’s Note
If you are not studying the markets with those who study market participants you are missing out on a vitally important aspect of your trading education. Case in point: James Montier and his studies on behavioral investing. The following is a sample of just a few of Montier’s studies and interviews on the role of behavior when investing. We would do well to study him.
AN INTERVIEW WITH JAMES MONTIER: “We are our own worst enemy because we are human. Evolution equipped us to deal well with the savannah of 150,000 years ago, but that doesn’t necessarily equate to leaving us well prepared for the world we find ourselves living in now.” (FT Advisor)
MONTIER’S SUGGESTED READING LIST: In order to give his choices a little structure James created four categories of books and only allowed himself to select five books in each group. (Eurosharelab)
DARWIN’S MIND: “The simple truth is that we aren’t adapted to face the world as it is today. We evolved in a very different environment, and it is that ancestral evolutionary environment that governs the way in which we think and feel.” (SSRN White Paper Download)
THE EFFICIENT MARKETS THEORY IS DEAD: “No matter how much you point out that it is dead, the believers simply state that it is just resting.” (FT.com)
THERE ARE NO SILVER BULLETS IN INVESTING: “Modern day investment management resembles, sadly, another old profession—and I’m not thinking of the oldest one, although there may be parallels there as well. Rather, I’m thinking of ancient alchemy with its near-constant promises to turn lead into gold, just as investment managers repeatedly offer to transform low returns into high returns.” (GMO White Paper)
THE SEVEN IMMUTABLE LAWS OF INVESTING: “When investors violate Law One by investing with no margin of safety, they risk the prospect of the permanent impairment of capital.” (GMO White Paper)
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David Blair
THE CROSSHAIRS TRADER
www.thecrosshairstrader.com
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