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 enlarge | Author: Michael J. Mauboussin
Publisher: Columbia University Press
Category: Book
List Price: $27.95
Buy New: $17.53
You Save: $10.42 (37%)
New (28) Used (6) from $16.31
Rating:  47 reviews
Sales Rank: 38809
Media: Hardcover
Edition: Upd Exp
Number Of Items: 1
Pages: 320
Shipping Weight (lbs): 1.3
Dimensions (in): 9.1 x 6.1 x 1.3
ISBN: 0231143729
Dewey Decimal Number: 332.6
EAN: 9780231143721
ASIN: 0231143729
Publication Date: September 26, 2007
Availability: Usually ships in 1-2 business days
Shipping: International shipping available
Condition: Brand New, Perfect Condition, Please allow 4-14 business days for delivery. 100% Money Back Guarantee, Over 1,000,000 customers served.
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| Customer Reviews:
 required reading October 24, 2007
2 out of 3 found this review helpful
Perspective and Context are something human's (and other primates) don't do well, so it is great to have a series of relevant essays on these subjects relative to investing. It should be in a serious investor's library.
More than a rehash August 29, 2007
1 out of 1 found this review helpful
This is a collection of essays and articles by the author. They are filled with information about psychology and investing, and teach the reader just how the brain works when it comes to investing/gambling. I have read several books by investors/coaches/traders who speak to this, including Elder, Tharp, Mark Douglas (now my 2nd best after reading this book)., Koppel, and more. I'd say this is just as insightful as anything Douglas wrote and recommend them both. I have yet to read Thaler. It seems with many psychology books, you have to read slow and pay careful attention, there will be many words that the psychology field uses you must remember the name of, so it's a slow, but very interesting read. I found parts fascinating, and interesting, including the parts about guppies, and ants.
Great book! You have to have good emotional control to perform optimally in the markets, so reading these types of books is just as important as those books that teach you how to pick stocks, if not more!
First-principles Investing August 12, 2007
2 out of 2 found this review helpful
Food for thought for investors, served as a delicious four-course meal with 30 bite-sized portions. The portions are a la carte and may be consumed in no particular order. The chef cherry-picks from a diverse set of sources and creates a recipe of highly palatable wisdom for all to mull over.
I am no professional investor and my first reaction to the book was that Mauboussin is stating the obvious. The financial wisdom is not being found in as "unconventional places" as the title may suggest: of course, you would look at behavioral psychology, gambling and coin-tosses for learning investment concepts. However, when it comes to investing, don't we all have our stories to tell about the gap between rationality and action at the point-of-decision. In a world where finance theories attempt at creating formulae to replace human responsibility in decision-making, Mauboussin goes back to the basics and provides a tool-kit that empowers humans to make better decisions.
In one of his essays, the author talks about the process of theory-building and explains how proper categorization of theories is essential. As theories improve, they evolve from attribute-based categories to circumstance-based categories. In other words, one needs to know when to apply what theories. Treat the book as a catalogue of references to cool concepts, and I can imagine you going back to its sections every so often in various circumstances.
As an example, the book puts emphasis on internalizing the philosophy of investing based on "expected value" rather than the probability of the outcome alone. As another example, the loss of an amount makes us feel 2 to 2.5 times worse than the gain of the same amount makes us feel better. Read the book to better understand how these apply.
Very interesting food for thought. July 3, 2007
3 out of 3 found this review helpful
Basically takes many different philosophical and scientific angles and shows how systems like the market work. Totally fascinating and will get you thinking. There are no trading tips so if that is what you want look elsewhere. What there is, is analysis of the market as a system and as compared to other natural systems. At the end of it I felt a bit like there was too much to think about and no real solution but then again maybe that is what the market is and why so few succeed at it.
Very Useful New Perspectives May 30, 2007
4 out of 4 found this review helpful
Investors often make the critical mistake of assuming good outcomes are the result (proof) of a good process. In contrast, the best long-term performers in any probabilistic field all emphasize process over outcome - eliminating distractions due to short-term luck. One should focus on corporate circumstances, not its attributes (eg. a low p/e ratio). So begins "More Than You Know," and its helpful essays - samples of which follow.
The frequency of correctness is often less important than the magnitude. In a casino, one must bet every time to play (though can increase bets when the odds look good); in the stock market, one only needs to bet when the odds are favorable.
The average percentage of funds exceeding the annual S&P return in any of the last 15 years is about 44%. The average person regrets losses at about 2.5X the rate of gains. It's is not enough to have your own view - also must consider what others think.
The pace of change is accelerating. The average life of a company in the S&P average has gone from 25-35 years in 1950 to 10-15 today; the average mutual fund holding period has fallen from about 15 years to 4 over the same period, while the average portfolio turnover has risen from 20% to over 100% (often simply to minimize deviation from the index). Average speed of product development and process refinement also accelerating.
People tend to respond more to those they admire/like, and want to reciprocate when done a favor. Investors tend to assume lower risks and higher returns when they feel god about an investment; the converse is also true. People also tend to follow the herd in markets, undermining the efficient market thesis, especially regarding investment timing.
Investing in industry shakeout survivors (eg. the disk drive industry) is superior to general investing.
S-Curve Growth: After a change (eg. new product, new market) it is best to buy when sales first start to slowly build, and sell before they taper off (mature, slows) because most buyers think in terms of linear extrapolation. New entrants generate greater returns than older, established competitors. One is very unlikely to achieve double-digit growth in a firm with revenues of over $20 billion; best returns for a firm are in its first five years.
Industry concentration and large market shares are both associated with improved sustained economic performance in an industry. Most discounted-cash-flow models overstate long-term returns - simply extrapolate.
Companies that have fallen (two consecutive years cash flow return on investment (CFROI) less than cost of capital, after two years of greater than cost of capital) have only a 30% chance of sustained recovery.
Of nearly 2,000 tech-stock initial public offerings between '80-'04, 5% accounted for over 100% of the $2 trillion in wealth creation; there was even strong Pareto concentration within this to 5% grouping. Thus, the major challenge of investors is to capture (or avoid) low-probability high-impact events.
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