20/20 Money: See the Markets Clearly and Invest Better Than the Pros
To be a more successful investor, you need to see the investment landscape more clearly. 20/20 Money—from Fisher Investments Press—can help you achieve this goal.
Designed to help you think differently about your investing choices, this reliable resource addresses new ideas and challenges widely held conventions. With 20/20 Money as your guide, you'll quickly learn how gaining a firm understanding of various concepts—from stock market and systems theory to neuroscience and psychology—can help you begin making better investment decisions. Along the way, you'll also discover some of the most successful strategies for thinking and learning, and how they can be applied to your investing endeavors.
To become a better investor, you have to have the discipline to make tough choices—choices that may not always be in line with tradition or commonly accepted invested wisdom. But the approach outlined throughout these pages can help you gain the vision to begin making better-informed investment decisions.
Chapter 1 Investing Is a Science 1
Apollo's Arrow Shot Crooked 2
Dionysus—More Than Just a Good Vintner 3
Use the Method, Not the Dogma 5
Careful with Categories 13
Could Math Be Wrong? 15
Reduction: Why You Can't Quantify Everything 19
Chapter 2 Investing Is a Discipline 27
Discipline, Discipline, Discipline 29
Sagacity: Seeing Isn't Believing 41
Understanding and Being Curious 48
Chapter 3 Human Behavior 51
Brain Basics 53
Brains on the Market 64
My, What a Terrible Memory You Have! 71
Bad Behavioral Finance 76
Behavioral Miscellany 79
Chapter 4 Sentiment and the Media 83
Sentiment Basics 85
News and the Media 90
What's Their Motive? 98
Tips and Tricks to Navigate the Media 100
Metaphors We Invest by 106
Chapter 5 How Stock Markets Really Work 113
Capitalism by Any Other Name 114
It's Complicated . . . A Crash Course in CEAS 118
The New Golden Rule 130
Oldest and Still the Best: Supply and Demand 139
Chapter 6 Forecasting, Part 1—The Principle of Probability 147
Forecasting Is Strange Alchemy 148
Types of Predictions 150
Probability Theory, or How Markets Are Nothing Like Coin Tosses 154
The Biggest Problem of Them All 163
Investing Lessons from Probability 165
Looking Ahead . . . 170
Chapter 7 Forecasting, Part 2 —Recognizing Patterns 173
A Pattern by Any Other Name 174
Stock Market Patterns 175
Patterns Through the Noise 179
It's a Game of Relative Expectations 181
Back to the Future: Using History to Find Patterns 187
Three Big Drivers 191
An Optimistic Note on Future Patterns 195
Chapter 8 Practical Portfolio Management 197
The Virtues of Heuristics 198
Goal Setting 199
Personal Goals 201
Portfolio Goals 205
The Top-Down Philosophy 210
Miscellaneous Heuristics 223
Chapter 9 The Nature of Risk and Navigating Markets in Troubled Times 229
Risk and Uncertainty 231
Financial Risk, or What Happens When You Assume 233
In Troubled Times 239
Parting Thoughts 253
Selected Bibliography and Further Reading 259
About the Author 269
See the Markets Clearly and Invest Better Than the Pros
By Michael Hanson (Fisher Investments)
To improve long-term investing success, investors should make the better choices in today’s dynamic market environment. 20/20 MONEY: See the Markets Clearly and Invest Better Than the Pros, (Wiley, June 2009; $27.95, ISBN: 978-0-470-28539-8), the latest title from Fisher Investments Press, can help investors stay ahead of the game.
Designed to help you think differently about markets and your investing choices, this valuable resource introduces new ideas and challenges widely-held conventions. 20/20 MONEY provides clear explanations of key concepts—from stock market and systems theory to neuroscience and psychology—helping put readers into a better position to excel in today’s turbulent investment arena.
While understanding economic fundamentals and analyzing data are important aspects of investing, without a clear vision and well-developed philosophy to help drive decisions, investment goals are difficult—if not impossible—to reach.
Through an interdisciplinary discussion ranging from stock market theory, mathematics, and history to systems theory, psychology, and science, 20/20 MONEY ventures outside the narrow realm of conventional investing to help readers gain the focus needed to optimize their portfolios.
Page by page, you can discover how to:
• Leverage current research in neuroscience and behavioral psychology to understand how your perceptions and natural emotions are often contradictory to your best financial interests.
• Apply the power of self-awareness and self-observation to build discipline and avoid common investing pitfalls.
• Navigate the media and gauge investor sentiment.
• Analyze the stock market and economy as a complex, emergent, adaptive system.
• Forecast stock markets in terms of probability and use pattern recognition.
• Create a framework for managing your own portfolio.
• Recognize risk and its many forms and overcome obstacles during turbulent times.
For readers interested in making money in the markets, 20/20 MONEY is an indispensible reference and guide book to help make the right choices in an uncertain economic climate.
About the Author
Michael Hanson has been an investment banker, a stock analyst, and currently is a senior editor and columnist for Fisher Investments’ Marketminder.com. He has lectured on topics of money management at the Haas School of Business at the University of California, Berkeley, and speaks regularly throughout the country on a variety of topics including capital markets and behavioral finance.
Fisher Investments is an independent investment management company serving the needs of institutional and individual investors globally. Fisher Investments' clients include large corporate and public pension plans, foundations and endowments, as well as thousands of affluent individuals. The firm is headquartered in Woodside, California, and is a registered investment adviser. Ken Fisher, founder and CEO, is the author of five books, many academic studies, and Forbes magazine's "Portfolio Strategy" column since 1984. In 2007, Fisher Investments and John Wiley and Sons, Inc. introduced Fisher Investments Press, a publishing imprint offering investment education for a broad audience. http://www.fisher-investments-press.com
Investments in securities involve the risk of loss, and investments in foreign securities can involve additional risks such as losses related to other currencies and securities markets.
See The Markets Clearly and Invest Better Than the Pros
By Michael Hanson
Wiley; June 2009; $27.95; Cloth
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