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The Psychology of Money: An Investment Manager's Guide to Beating the Market

ISBN: 978-0-471-39074-9
272 pages
January 2001
The Psychology of Money: An Investment Manager

Description

Discover the Ideal Investment Strategy for Yourself and Your Clients

"To enhance investment results and boost creativity, Jim Ware replaces the maxim know your investments with know yourself. And he gives us specific testing tools to do the job."
Dean LeBaron, Founder, Batterymarch Financial Management, Chairman, Virtualquest.company, and investment author and commentator

"Many investment firms fail, even though they are run by intelligent, qualified professionals, because they lack creativity. This book can rescue you. Jim Ware explains how to organize your business to encourage creative thinking. In five years, your customers will be working with an advisor who read this book, so make sure you are the one who did."
Ralph Wanger, President, Acorn Investment Trust, CFA and author of A Zebra in Lion Country: Ralph Wanger's Guide to Investment Survival

"Jim Ware has a great knack for understanding people and successful investing. This unusual combination of skills creates a rare find: useful insights to improve investment performance through helping people work together better. Jim’s wit and humor make this a fun read as well!"
Dee Even, Senior Investment Officer, Allstate Insurance Company, Property & Casualty

"The Psychology of Money represents a major step toward development of a portfolio theory that recognizes human dynamics and differences among people. Jim's content is solid, and his presentation is engaging. This book ought to be on every practitioner’s bookshelf."
Kenneth O. Doyle, University of Minnesota, Author, The Social Meanings of Money and Property: In Search of a Talisman

"Finally, an insightful look at the human side of investing. A step-by-step guide to enhancing management performance to increase returns."
Abbie Smith, PhD, Professor of Accounting.University of Chicago Business School

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Table of Contents

PART ONE The Investor: Psychological Traits of the Masters

CHAPTER 1 Investment Masters: The Quintet 3

CHAPTER 2 The Eight Great Traits 9

1. Breadth: Taking in Information 9

2. Observation: Retaining Details 10

3. Objectivity: Thinking Clearly 10

4. Discipline: Being Consistent and Organized 12

5. Depth: Thinking in Focus and Independently 13

6. Creativity: Seeing the Big Picture and Using Metaphors 14

7. Passion: Maintaining Deep Devotion to the Subject 15

8. Flexibility: Being Open to Change, Going with the Flow 15

CHAPTER 3 Secrets of the Masters: Complexity 17

CHAPTER 4 Self-Diagnosis 23

Extravert (Breadth)/Introvert (Depth): The Energy Source 24

Sensing (Observation)/Intuiting (Creativity): What People Pay Attention To 26

Thinking (Objectivity)/Feeling (Passion): How People Make Decisions 28

Judging (Discipline)/Perceiving (Flexibility): How People Choose to Live 30

Self-Testing 33

CHAPTER 5 Strengthening One’s Abilities: Drop and Give Me 50 35

Extraverts and Introverts: Stretching Exercises 36

Sensing and Intuition: Stretching Exercises 39

Thinking and Feeling: Stretching Exercises 42

Judging and Perceiving: Stretching Exercises 44

Striking a Balance 46

CHAPTER 6 The Ideal Investment Personality 47

CHAPTER 7 The Typical Investment Personality 51

PART TWO The Investment Team: Collaborative Techniques

CHAPTER 8 Teamwork Today? 67

CHAPTER 9 Golden Gloves or Golden Rule? 75

CHAPTER 10 Tools for Investment Teams 81

Identifying Preferences 82

Getting a Team Working Together 84

CHAPTER 11 Case History: Collaboration for a Money Management Team 89

CHAPTER 12 Temperaments and Teams: Implications for the Markets 97

The Guardian (SJ): Lions Rule the Kingdom 100

The Rationalist (NT): The Wise Old Owl 102

The Adventurist(SP): The Wily Fox 103

The Idealist(NF): The Compassionate Dolphin 105

CHAPTER 13 Temperament and Client Service 109

PART THREE The Creative Investment Team: Tools for Enhancing Creativity

CHAPTER 14 Brainstorming for the Masses 121

CHAPTER 15 The Creative Investor: Taming the Critics 129

CHAPTER 16 Creating a Safe Place 139

Exercises: Creating a Safe Place 148

CHAPTER 17 Guidelines for Safety 151

Exercise 157

Tools for Enhancing Creativity: "ACROBAT"160

CHAPTER 18 "A"Is for Assume Nothing 161

Exercise 1: Overconfidence Quiz 166

Exercise 2: Clean Slate 167

CHAPTER 19 "C"Is for Change Gears 169

CHAPTER 20 "R"Is for Risking Discomfort 175

Exercise 179

CHAPTER 21 "O"Is for Omit Either/Or Thinking 185

Exercise 189

CHAPTER 22 "B"Is for Borrow from Other Disciplines 191

Exercise 193

CHAPTER 23 "A"Is for Ask for Help 195

Exercise 201

CHAPTER 24 "T"Is for Tools and Techniques 203

CHAPTER 25 Getting Personal 213

Exercise: What Kind of Investor Are You? 222

PART FOUR The Intuitive Investor: Whole-Brained Investing

CHAPTER 26 Quantum Investing 225

CHAPTER 27 Waves and/or Particles 231

CHAPTER 28 The Case for Intuition 235

CHAPTER 29 Operating on All Cylinders 241

Index 251

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Author Information

JIM WARE is a chartered financial analyst who has been a research analyst and portfolio manager for Allstate Insurance Company. He has also delivered speeches on the connection between creativity and business for audiences around the world, including the Association for Investment Management and Research. A dynamic speaker, he incorporates his knowledge of Jungian psychology into his substantial business background. He has a degree in philosophy and an MBA in finance from the University of Chicago.
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Reviews

"The Psychology of Money is a well-written and entertaining book that challenges money managers and individual investors to rethink their view of the investment decision-making process."(Financial Analysts Journal)

"This book should be read by everyone!" (Mimi Lord, Morningstar Senior Editor)
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