Think Like the Great Investors

When we decide to invest our savings we embark on a learning journey that will take many years to complete. First, we need knowledge. We must get our heads around the jargon and understand how the financial markets operate. Most important is that we have a feel for the history of markets in case we learn by repeating the mistakes of those who have gone before us. Next, we must learn how to analyse the economy and financial markets. There are cycles in economic activity that come around at varying time intervals. Unless we understand this, we are likely to find our investments badly damaged and struggle for years to recover to where we were before the last downturn. Then, we should learn how to analyse companies so that we choose good stocks to invest in when their prices are below their value. Above all, we must seek to buy stocks that afford a margin of safety, which will protect our portfolio if things do not go well for a while. An integral part of this is to have strong disciplines around risk management through diversification and position sizing. Most investors think this is enough to be successful, but one thing is missing. All investing requires making decisions in selecting and managing our holdings. It is never just set-and-forget, because markets are always changing. Much of our decision-making skill will be developed through experience, but if it was that simple, we would all be great investors after maybe 10 years or so of active investing. There are very few great investors in the world. They make better decisions than the average investors because they think differently. Think Like the Great Investors explains the cognitive biases that the most successful investors seem to avoid. It gives you a range of strategies to manage them and make superior investment decisions. This book will be one of the best investments you ever make.