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The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails



The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails

Steven M. Sears

ISBN: 978-1-118-93404-3 October 2014 256 Pages

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A new approach to investing based on how Wall Street insiders approach the market

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.

Chapter 1 Risk 1

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

Perversities 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

Action 148

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

Illusions 167

Victor 169

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

Virtue 194

Ladders 195

A Systematic Change 196

Flash Crash 198

Soft Spots 199

Washington 201

A Global Problem 202

Present at the Creation 204

The Illusion of Regulation 205

Power 208

The Balance of Power 208

Acknowledgments 211

Notes 215

About the Author 225

Index 227

I must create a system, or be enslaved by another man's.
—William Blake