The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails
The Indomitable Investor deconstructs the stock market as the public has come to know it and reconstitutes it from the inside out from the perspective of the fortunate few who dominate Wall Street. By revealing how top investors and traders think and act Steven Sears shows the stock market to be an undulating ocean of money, with seasoned investors reading the waves others cannot.
Teaching readers to think about the market in radically different ways, The Indomitable Investor shows how to improve returns—and, just as importantly, avoid losses—with disciplines deployed by people who almost always do exactly the opposite of what Wall Street says to do.
Laying bare great fallacies, the book explains that non-professional investors wrongly think the stock market is a place to make money, which is what Wall Street wants them to try to do. The Indomitable Investor says otherwise and shows how Wall Street's best investors have a completely different focus.
- Explains the critical ideas and insights of top traders and investors in language anyone can understand and implement
- Packed with material rarely shared off Wall Street that is used every day by professional investors
- Introduces the 17 most important words on Wall Street
- Teaches critical skills, including: How to increase returns by focusing on risk, not potential profits; how to use the stock market's historical patterns to optimize investment decisions; understanding key relationships between stocks and the economy that predict what will happen to stocks and the broader market; how to increase mutual fund returns with an easy adjustment that redirects the bulk of profits to you—not mutual fund companies, and how to analyze information like seasoned investors to move beyond "statement of the obvious" news reports that turn ordinary investors into Dumb Money
Accessible to readers of all backgrounds, including those with a limited understanding of investing, The Indomitable Investor will change how investors view the stock market, Wall Street, and themselves.
A Nation of Stock Market Junkies 4
Calm Words for Wild Times 7
Chapter 2 Greed 13
The Hardest Decision 23
The Iron Man 24
Atlas Doesn’t Shrug 27
The Warrior Philosopher 28
Like Monkeys at the Zoo 30
A Context 32
The Danger of Warren Buffett 34
The Value of Errors 35
Chapter 3 Fear 37
The Theory of Contrary Opinion 42
Exile on Wall Street 44
The Media Is the Message 47
Media Misreads Google 49
Paulson’s Gamble 50
Buffett’s Goldman Trade 53
Fading the News 53
Chapter 4 The Anatomy of Information 55
The Doors of Perception 58
Anatomy of Information 60
The Future Is Now 63
Show Business 66
Words Are Weapons 68
Trust, but Verify 70
Chapter 5 Chaos 81
Money Never Sleeps 82
The Black Swan’s Calling Card 85
Map of the Market 86
Don’t Get Skewed 89
Apathy and Fear Are Your Friend 90
Fear Not Black Swans 91
Is MPT MIA or KIA? 92
800 Years of Crisis 97
Fear Gray Swans 98
Chapter 6 Diogenes’ Lantern 103
Performance Is Relative 106
Death by a Thousand Fees 107
Stockbroker Pay 111
Hidden Fees 116
Beware of New Products 116
An Uncomfortable Conversation 117
A Funny Aside 118
Suitability Requirement 119
Fiduciary Standard 120
Shakespeare’s Rule 121
Appeals to Common Sense 121
Trust but Verify 122
Active versus Passive Fund Management 125
Chapter 7 Cycles 127
The Year in Stocks 128
Mysterious Repetitions 136
Flash Mobs 137
History’s Hiccups 138
The Economy in Slow Motion 139
The Guts of ISM 141
Numerical Nuances 142
Says Who? Says Goldman Sachs 142
Chapter 8 Behavior 151
One Brain: Two Minds 152
Maps and Models 154
This Is Your Brain Visualizing Money 156
Compulsive Gambler 158
B. F. Skinner Goes to Wall Street 158
The Casino Culture 160
Your Own Private Stock Market 162
Often Wrong; Never in Doubt 163
Illusion of Memory 164
Safe Havens in the Age of Madoff 165
An Antidote for Overconfidence 170
Go Slow to Go Fast 172
Think Week 173
Halos and Angels 173
Big Brother Is Studying You 175
Big Bank Is Watching You 177
Ancient Lessons 178
Chapter 9 Watchman, What of the Night? 181
The Next Crash 183
Misperceptions and Illusions 184
Revolving Doors 185
Investor Laureate 186
A Fox in the Henhouse 187
The Tremendous Task 188
Sane Money, Not Mad Money 189
Repetition and Velocity 191
More Education 192
Plain Speaking 192
The Cause of Failure 193
A Systematic Change 196
Flash Crash 198
Soft Spots 199
A Global Problem 202
Present at the Creation 204
The Illusion of Regulation 205
The Balance of Power 208
About the Author 225
I must create a system, or be enslaved by another
The Indomitable Investor: Why a Few Succeed in the Stock Market when Everyone Else Fails (Wiley; April 2012; $29.95; 978-1-1181-1034-8; Hardcover, Ebook) is the book Wall Street hopes Main Street never reads.
Written by Steven M. Sears, a Barron’s and Barrons.com columnist, The Indomitable Investor shows dumb money -- and that’s precisely how Wall Street views individual investors -- how to become smart money. His book is filled with rarely discussed insights and disciplines from the most successful and sophisticated investors.
The Indomitable Investor takes a sharply different approach from most investment books. Sears has for the first time synthesized complicated, disparate ideas critical to successful investing into an easily understood book anyone can use to better navigate the stock market. Readers will not encounter get rich quick gimmicks, or bogus moneymaking secrets common in other books.
The Indomitable Investor shows how some investors consistently outperform the market using a dramatically different approach from all others that is predicated upon not losing money by understanding and containing investment risks. Most individual investors wrongly believe the stock market is, first and foremost, a place to make money. They never recover from that fatal misstep.
Sears’ new book reveals how successful investors listen to the market, and just as importantly, ignore the distracting noise surrounding trading that tricks many people into making bad decisions.
“Anyone who spends meaningful time in the market quickly learns the public’s understanding of what occurs, and why, rarely resembles what takes place,” Sears says. “Most individual investors remain trapped in an often destructive investment cycle because they have no idea such a dichotomy exists.”
The Indomitable Investor’s key points:
- The most important words investors can know: “Bad Investors think of ways to make money. Good investors think of ways to not lose money.”
- How to use historical trading patterns and economic cycles to optimize investment decisions and increase returns.
- How to boost mutual fund returns with easy adjustments to redirect the bulk of profits to investors —not mutual fund companies.
- Using financial news, rather than getting used by it, to escape the dumb-money rut.
- How to spot “black swans.”
- How to break the curse of buying high and selling low.
- Recognizing the influence of key behavioral finance insights, including how images cue investors to make risky decisions.
Sears criticizes Washington and Wall Street for lamenting the nation’s financial literacy crisis - and doing nothing to fix the problem. He proposes Washington’s leaders appoint an Investor Laureate to initiate a national conversation about investing anyone can understand. Washington now speaks through complex securities laws that can only be understood by securities lawyers, and Wall Street’s experts who find ways to sidestep the spirit, if not intent, of the very laws intended to protect investors.
Sears says merging the Commodity Futures Trading Commission and Securities and Exchange Commission is a critical first step to insure the U.S. regulatory structure catches up with the modern market’s rapid evolutions. Everyone knows the futures market sets stock prices, but SEC does not regulate financial futures.
The essence of many people’s investment problems, Sears says, is traced to how quickly America morphed to a nation of investors, rather than savers. Many people mistakenly think what works on Main Street works on Wall Street. The disconnect bothers no one on Wall Street or Washington, which is why it is imperative to arm investors with the principles and disciplined approach detailed in The Indomitable Investor so they can begin taking more out of the stock market than the stock market takes out of them.
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