90% of stock investing is a psychological battle.
 |
Description
Book Introduction
If you control people's minds
'Stock investment is a sure win!'
“Successful investing has nothing to do with IQ.
Impulsive investment
“It depends on one’s temperament to be able to control oneself.”
If you recall Warren Buffett's words,
What matters in the world of investing is
It's 'heart and mind'.
Ultimately, the reasons for investment failure
All successful strategies,
Easily swayed by greed and fear
Making decisions impulsively
The answer must be found in ‘investment psychology.’
What about this book?
When we invest, we clearly understand 'how we actually behave, why we behave that way, how that behavior causes us to lose money, and how to avoid that behavior.'
It offers excellent insights and practical methods for self-control, especially for those who are swept up in the market sentiment and invest.
What about this book?
We are using a behavioral finance approach that has never been explored before in the field of investment studies.
It emphasizes finding the "true meaning" of investing, guides us through the process, and specifically explains how individual psychology influences sound investment decisions.
What about this book?
It vividly demonstrates how our psychological biases influence our investment decisions and hinder our efforts to invest successfully.
To be successful in investing, simply acquiring knowledge about stocks is not enough.
This can only be realized if there is an understanding of human psychology.
'Stock investment is a sure win!'
“Successful investing has nothing to do with IQ.
Impulsive investment
“It depends on one’s temperament to be able to control oneself.”
If you recall Warren Buffett's words,
What matters in the world of investing is
It's 'heart and mind'.
Ultimately, the reasons for investment failure
All successful strategies,
Easily swayed by greed and fear
Making decisions impulsively
The answer must be found in ‘investment psychology.’
What about this book?
When we invest, we clearly understand 'how we actually behave, why we behave that way, how that behavior causes us to lose money, and how to avoid that behavior.'
It offers excellent insights and practical methods for self-control, especially for those who are swept up in the market sentiment and invest.
What about this book?
We are using a behavioral finance approach that has never been explored before in the field of investment studies.
It emphasizes finding the "true meaning" of investing, guides us through the process, and specifically explains how individual psychology influences sound investment decisions.
What about this book?
It vividly demonstrates how our psychological biases influence our investment decisions and hinder our efforts to invest successfully.
To be successful in investing, simply acquiring knowledge about stocks is not enough.
This can only be realized if there is an understanding of human psychology.
- You can preview some of the book's contents.
Preview
index
Preface∥The human brain is not designed to be good at stock investing!
Before we get started∥Investors who have fallen into the same repetitive cycle of ‘greed and fear’!
Isaac Newton and the South Sea Trading Company Bubble / Mark Twain and the Silver Mania / The Fall of Long-Term Capital Management, a Hedge Fund / What is the Goal of Behavioral Finance?
PART Ⅰ Irrational Markets and Investment Psychology
Chapter 01
The invisible hands that govern investment psychology
Why Most Investors Can't Beat the Market? / Analysts vs. Darts / Analysts' Forecasting Abilities / The Dilemma of Crowd Intelligence / Does Weather Affect Investment Decisions? / Stock Prices Are the Shadow of Emotions
Chapter 02
The Price of Emotions: Why Expectations Betray and Faith Clings
Cognitive distortions of emotional investors / Expectations and comparison mechanisms / The pitfalls of counterfactual comparisons / Beliefs and expectations, the placebo effect / Could the news be the cause of the panic? / Self-deception: It's too late to turn to reason / The courage to face uncomfortable truths
Chapter 03
How Intuition Predicts Profits
Analysis or Intuition: Which Are You? / Instinctual Intuition That Makes Investment Decisions / What Does Your Gut Tell You? / Listen to Your Intuition, Not Your Mind / The Power and Shadow of the Emotional Heuristic / Emotional Intelligence Manages Risk / Unconscious Signals That Control Your Investments
PART Ⅱ: THE IMPACT OF EMOTIONS ON INVESTMENT
Chapter 04
The Emotional Trap: Moments When Investors Lose Their Judgment
Emotions move before investing / The difference between positive and negative emotions / Fear of regret causes investment failure / Sadness makes you buy, disgust makes you sell / Anger holds on, fear sells first / The paradox of projection bias / Emotions create shortcuts in decision-making
Chapter 05
Signals of Greed: How Markets Use Them
Why do we repeatedly fall victim to stock price manipulation? / Who ignites investors' irrational madness? / Anatomy of stock price inflation / Greed, a basic human desire / Experiment with the behavioral investment allocation strategy (BIAS) / Risk always appears as opportunity / Three signals that guide purchasing decisions / The more greedy you are, the more cool-headed you become.
Chapter 06
Overconfidence and overconfidence; collapsing investors
The Psychology of Hubris / Overconfidence Beyond Confidence / Are Investors Really in Control? / The Neurochemical Characteristics of the Exploratory Mind / The Most Dangerous Risk is Hubris / The Good Confidence Required for Investing / The Requirements for Investors to Learn from Their Mistakes
Chapter 07
Panic is an instinct, and response is a skill.
Fear is contagious, and opportunity lies at its end / Climbing the 'Wall of Concern' / Fear always appears ahead / It's all in the head / Projection bias, the trap of empathy / Lessons from investing / New opportunities amidst risk
Chapter 08
Who are the great investors?
Successful Investing? Innate Talent vs. Acquired Experience / Five Factors That Shape Personality / Personality Types Ideal for Investing / Investors with Neurotic Tendencies / Extroverted, Open-minded, and Conscientious Investors / The Correlation Between Investing and Personality / The Psychology of Trading
Chapter 09
Decision-making; issues of probability, ambiguity, and trust
People who bet on emotions, not profits / The jackpot trap / The probability trap / The power of vivid imagination / Ambiguity avoidance psychology, possibility and trap / The possibility of applying excessive weight / The neuroscience of the ultimatum game / Hormones in the brain: Designing financial psychology
PART Ⅲ Investment Psychology When Thinking About Money
Chapter 10
Frame; the psychological mechanism that determines profits
The paradox of loss aversion: Selling profits and holding on to losses / Stock trading by father and son / Investors trapped in frames / The risks of framing / Loss aversion varies from person to person and from recent events / Holding on to successful stocks / The secret to success for long-term investors
Chapter 11
Loss aversion; a psychological pattern that blocks profits
Why We Can't Sell and Obsess Over Stocks / The Neuroscience of Loss Aversion / The Stock Premium Puzzle / The Temptation of Deliberate Put Options / How to Overcome Loss Aversion / Train Yourself to Be More Doubtful Than Certain / Investor Principles for Overcoming Loss Aversion
Chapter 12
The phenomenon of crowding; everyone else does it too
Buying stocks based on other people's advice will lead to ruin / Focusing is instinct, profit is choice / Social proof, following the footsteps of those who have gone before / Social comparison, others' achievements become my deficiencies / Solomon Asch and the conformity phenomenon / Information cascade phenomenon / Nice clothes, fast cars, fancy titles / Analysts' abuse of authority / Lifestyles that go against the trend
Chapter 13
The Psychology of Chart Reading; Astrology of the Stock Market
Artificial Neural Networks: The Stock Market Can't Learn / Data Mining and Self-Deception / Trends vs. Mean Reversion Bias / The Moment You Trust a Chart, You Become Confident / The Trap of Mean Reversion / The Su-Cha-Woo Gambling Experiment / People Waiting for a Catastrophe
Chapter 14
Attention and memory; what was the name?
Concentration addicts crumble in front of the screen / Past returns don't guarantee the future / Good memories vs. bad memories / Hindsight bias: "I knew it" / Just a name change, but the stock price goes up? / A stock that rose 320-fold in two days / Individual investors who are swayed by the news
PART IV: Practical Psychological Investment
Chapter 15
Things that affect risk taking
A portfolio bound to memories that reject returns / The gender code of investment psychology operates along masculine and feminine lines / Men believe in numbers, women rely on trust / The young brain bets, the old brain diversifies / The correlation between age and cognitive ability / Eastern and Western investment psychology
Chapter 16
Investors' Training Methods for Successful Investment
Invest for passion, not money / Engrave financial cues into your subconscious / Investing psychology that even protects happiness / Neuroplasticity and investment psychology training / Drug-manipulated profits are sure to collapse / Investing is about self-discipline, not emotion / Keep an investment journal
Chapter 17
A New Investment Compass Led by Behavioral Finance
Harvesting the Risk Premium / Risk Premium and Expectations / Value Stocks vs. Glamour Stocks / The Optimal Portfolio: A Balance Between Short-Term Momentum and Long-Term Indexes / Buying on Rumors, Selling on News / The Limits of Arbitrage: Knowing the Differences Between Buying and Selling / Behavioral Finance: Market-Beatin' Investment Strategies
Before we get started∥Investors who have fallen into the same repetitive cycle of ‘greed and fear’!
Isaac Newton and the South Sea Trading Company Bubble / Mark Twain and the Silver Mania / The Fall of Long-Term Capital Management, a Hedge Fund / What is the Goal of Behavioral Finance?
PART Ⅰ Irrational Markets and Investment Psychology
Chapter 01
The invisible hands that govern investment psychology
Why Most Investors Can't Beat the Market? / Analysts vs. Darts / Analysts' Forecasting Abilities / The Dilemma of Crowd Intelligence / Does Weather Affect Investment Decisions? / Stock Prices Are the Shadow of Emotions
Chapter 02
The Price of Emotions: Why Expectations Betray and Faith Clings
Cognitive distortions of emotional investors / Expectations and comparison mechanisms / The pitfalls of counterfactual comparisons / Beliefs and expectations, the placebo effect / Could the news be the cause of the panic? / Self-deception: It's too late to turn to reason / The courage to face uncomfortable truths
Chapter 03
How Intuition Predicts Profits
Analysis or Intuition: Which Are You? / Instinctual Intuition That Makes Investment Decisions / What Does Your Gut Tell You? / Listen to Your Intuition, Not Your Mind / The Power and Shadow of the Emotional Heuristic / Emotional Intelligence Manages Risk / Unconscious Signals That Control Your Investments
PART Ⅱ: THE IMPACT OF EMOTIONS ON INVESTMENT
Chapter 04
The Emotional Trap: Moments When Investors Lose Their Judgment
Emotions move before investing / The difference between positive and negative emotions / Fear of regret causes investment failure / Sadness makes you buy, disgust makes you sell / Anger holds on, fear sells first / The paradox of projection bias / Emotions create shortcuts in decision-making
Chapter 05
Signals of Greed: How Markets Use Them
Why do we repeatedly fall victim to stock price manipulation? / Who ignites investors' irrational madness? / Anatomy of stock price inflation / Greed, a basic human desire / Experiment with the behavioral investment allocation strategy (BIAS) / Risk always appears as opportunity / Three signals that guide purchasing decisions / The more greedy you are, the more cool-headed you become.
Chapter 06
Overconfidence and overconfidence; collapsing investors
The Psychology of Hubris / Overconfidence Beyond Confidence / Are Investors Really in Control? / The Neurochemical Characteristics of the Exploratory Mind / The Most Dangerous Risk is Hubris / The Good Confidence Required for Investing / The Requirements for Investors to Learn from Their Mistakes
Chapter 07
Panic is an instinct, and response is a skill.
Fear is contagious, and opportunity lies at its end / Climbing the 'Wall of Concern' / Fear always appears ahead / It's all in the head / Projection bias, the trap of empathy / Lessons from investing / New opportunities amidst risk
Chapter 08
Who are the great investors?
Successful Investing? Innate Talent vs. Acquired Experience / Five Factors That Shape Personality / Personality Types Ideal for Investing / Investors with Neurotic Tendencies / Extroverted, Open-minded, and Conscientious Investors / The Correlation Between Investing and Personality / The Psychology of Trading
Chapter 09
Decision-making; issues of probability, ambiguity, and trust
People who bet on emotions, not profits / The jackpot trap / The probability trap / The power of vivid imagination / Ambiguity avoidance psychology, possibility and trap / The possibility of applying excessive weight / The neuroscience of the ultimatum game / Hormones in the brain: Designing financial psychology
PART Ⅲ Investment Psychology When Thinking About Money
Chapter 10
Frame; the psychological mechanism that determines profits
The paradox of loss aversion: Selling profits and holding on to losses / Stock trading by father and son / Investors trapped in frames / The risks of framing / Loss aversion varies from person to person and from recent events / Holding on to successful stocks / The secret to success for long-term investors
Chapter 11
Loss aversion; a psychological pattern that blocks profits
Why We Can't Sell and Obsess Over Stocks / The Neuroscience of Loss Aversion / The Stock Premium Puzzle / The Temptation of Deliberate Put Options / How to Overcome Loss Aversion / Train Yourself to Be More Doubtful Than Certain / Investor Principles for Overcoming Loss Aversion
Chapter 12
The phenomenon of crowding; everyone else does it too
Buying stocks based on other people's advice will lead to ruin / Focusing is instinct, profit is choice / Social proof, following the footsteps of those who have gone before / Social comparison, others' achievements become my deficiencies / Solomon Asch and the conformity phenomenon / Information cascade phenomenon / Nice clothes, fast cars, fancy titles / Analysts' abuse of authority / Lifestyles that go against the trend
Chapter 13
The Psychology of Chart Reading; Astrology of the Stock Market
Artificial Neural Networks: The Stock Market Can't Learn / Data Mining and Self-Deception / Trends vs. Mean Reversion Bias / The Moment You Trust a Chart, You Become Confident / The Trap of Mean Reversion / The Su-Cha-Woo Gambling Experiment / People Waiting for a Catastrophe
Chapter 14
Attention and memory; what was the name?
Concentration addicts crumble in front of the screen / Past returns don't guarantee the future / Good memories vs. bad memories / Hindsight bias: "I knew it" / Just a name change, but the stock price goes up? / A stock that rose 320-fold in two days / Individual investors who are swayed by the news
PART IV: Practical Psychological Investment
Chapter 15
Things that affect risk taking
A portfolio bound to memories that reject returns / The gender code of investment psychology operates along masculine and feminine lines / Men believe in numbers, women rely on trust / The young brain bets, the old brain diversifies / The correlation between age and cognitive ability / Eastern and Western investment psychology
Chapter 16
Investors' Training Methods for Successful Investment
Invest for passion, not money / Engrave financial cues into your subconscious / Investing psychology that even protects happiness / Neuroplasticity and investment psychology training / Drug-manipulated profits are sure to collapse / Investing is about self-discipline, not emotion / Keep an investment journal
Chapter 17
A New Investment Compass Led by Behavioral Finance
Harvesting the Risk Premium / Risk Premium and Expectations / Value Stocks vs. Glamour Stocks / The Optimal Portfolio: A Balance Between Short-Term Momentum and Long-Term Indexes / Buying on Rumors, Selling on News / The Limits of Arbitrage: Knowing the Differences Between Buying and Selling / Behavioral Finance: Market-Beatin' Investment Strategies
Detailed image
Into the book
“If you ask a fearful investor why he or she sells stocks at a loss, they won’t say, ‘Because I’m scared.’
Instead, they cite the negative economic situation.
Emotional investors fail to recognize that their investment outlook is driven by emotional cognitive distortions, not facts.”
“People who suffer from confirmation bias only look for facts that support their opinions and beliefs and ignore information that contradicts them.
“When we fall into the projection bias, we misjudge our future needs and desires because we believe that our future emotional states will be similar to our present ones.”
“In reality, almost all investors react emotionally to market behavior, and this is especially true for novice investors.
Investors become anxious when the market is flat, exultant when it is bullish, and intensely suspicious and fearful when it is in a sharp downturn.
These emotions change the way investors think and even the things they invest in.”
“The reason people fall prey to financial investment scams is because they entered the market later than others, and because other investors appear to be having success, they want to invest in successful stocks as well.
This greed leaves investors vulnerable to being manipulated by those who are always on the lookout for opportunities to exploit them.”
“The ‘atmosphere’ of the media influences the risk perception of ordinary investors.
When a series of extremely negative economic news reports are released, the general investor sentiment tends to shift towards risk aversion.
However, investors who actually 'buy' stocks while such broadcasts are being broadcast actually realize larger profits in the long run.
“While extremely positive news reports are being reported, the opposite phenomenon occurs.”
“The reason I believe great traders can manage volatility and unexpected events so well is because they are flexible.
Realistic, adaptable, and cautious.
They use excellent asset management techniques and are fully aware that they can lose money at any time.”
“Very few people train themselves to seek out evidence that contradicts their own beliefs.
When I trade, I try to find evidence that contradicts my thinking.
This is a very difficult task.
That's why I keep training myself to ask myself why I believe my position will go down instead of up.”
“Keeping an investment journal is an important part of a trader’s training and practice that must be undertaken daily.
Just as athletes train and hone their physical skills, investors must clearly understand their strengths and weaknesses in the mental game of investing.
“While keeping an investment journal might seem like a tedious and time-consuming process, remember that athletes spend hundreds or even thousands of hours practicing and training for a one-hour match.”
Instead, they cite the negative economic situation.
Emotional investors fail to recognize that their investment outlook is driven by emotional cognitive distortions, not facts.”
“People who suffer from confirmation bias only look for facts that support their opinions and beliefs and ignore information that contradicts them.
“When we fall into the projection bias, we misjudge our future needs and desires because we believe that our future emotional states will be similar to our present ones.”
“In reality, almost all investors react emotionally to market behavior, and this is especially true for novice investors.
Investors become anxious when the market is flat, exultant when it is bullish, and intensely suspicious and fearful when it is in a sharp downturn.
These emotions change the way investors think and even the things they invest in.”
“The reason people fall prey to financial investment scams is because they entered the market later than others, and because other investors appear to be having success, they want to invest in successful stocks as well.
This greed leaves investors vulnerable to being manipulated by those who are always on the lookout for opportunities to exploit them.”
“The ‘atmosphere’ of the media influences the risk perception of ordinary investors.
When a series of extremely negative economic news reports are released, the general investor sentiment tends to shift towards risk aversion.
However, investors who actually 'buy' stocks while such broadcasts are being broadcast actually realize larger profits in the long run.
“While extremely positive news reports are being reported, the opposite phenomenon occurs.”
“The reason I believe great traders can manage volatility and unexpected events so well is because they are flexible.
Realistic, adaptable, and cautious.
They use excellent asset management techniques and are fully aware that they can lose money at any time.”
“Very few people train themselves to seek out evidence that contradicts their own beliefs.
When I trade, I try to find evidence that contradicts my thinking.
This is a very difficult task.
That's why I keep training myself to ask myself why I believe my position will go down instead of up.”
“Keeping an investment journal is an important part of a trader’s training and practice that must be undertaken daily.
Just as athletes train and hone their physical skills, investors must clearly understand their strengths and weaknesses in the mental game of investing.
“While keeping an investment journal might seem like a tedious and time-consuming process, remember that athletes spend hundreds or even thousands of hours practicing and training for a one-hour match.”
--- From the text
Publisher's Review
What you will gain from this book:
The "Psychological Investment Compass" that Points to the North Star of Investment!
▶ How do people actually behave when investing?
― Psychological biases that have a decisive influence on investment
▶ Why do they act like that?
―Why psychological bias arises
▶ How does such behavior cause you to lose money?
― Losses caused by psychological bias
▶ How can I avoid such behavior?
― Strategies to prevent psychological bias
If you are an investor like this, don't hesitate for a second,
"Study investment psychology before stocks!"
Loss-averse investors who buy and sell dozens of times a day, driven by emotions.
· Confirmation bias investors who feel anxious when holding on and impatient when still
· A "no-loss investor" who sells profitable stocks early and holds on to loss-making ones until the very end.
· "Emotional Buyer" investors swayed by YouTube recommendations, stock market posts, and circulating news.
· A "buhwanodong-type investor" who turns into a bear (seller) in the morning and a bull (buyer) in the evening.
Anxious investors, who lack investment principles and become anxious whenever stock prices fluctuate
· "Impatient investors" who are obsessed with short-term profits despite knowing the value of long-term investing.
Impulsive investors, who prioritize emotions over analysis and make trading decisions within minutes.
· A "blind investor" who pours his heart and soul into a single stock without hesitation!
· A "one-hit wonder investor" who believes that stocks are a one-shot deal and always chases a jackpot.
Human investment psychology
Dissecting the nature of stock investment!
The human brain is hardwired to make decisions in a certain way.
Unfortunately, the way our brains are wired doesn't help us make money in the financial markets at all.
Author Richard L.
No one knows this better than Peterson.
Peterson, founder of Market Psychology Consulting, a provider of investment consulting, a former trader, developer of psychology-based trading software, and investment coach, gained his knowledge firsthand by witnessing how biases, or subconscious mistakes, hinder market participants' financial decision-making.
Now, through this book, Peterson shares his valuable experiences with us.
Drawing on neurofinance research, which applies neuroscience to investment practices, as well as psychology and behavioral finance, Peterson details the biases that are firmly "hardwired" into investors' brains.
Next, we introduce methods to overcome these obstacles and improve your investment decision-making skills.
After introducing the most basic biases common to most investors, using examples such as Long-Term Capital Management, Isaac Newton and the South Sea Bubble, and Mark Twain and the silver mania of the 1860s, the book begins to delve into psychological biases and ways to overcome them.
The human brain
It's not designed to be good at stock investing!
First, the author describes the basic functions of the brain, then shows how ill-suited the brain's workings are to modern financial markets.
We then explain the emotional states and brain chemicals that investors are prone to, how these substances alter financial judgment, and what personality traits are optimal for investing.
Next, we move on to investment-related thinking, introducing common thought traps in investment analysis and detailing common misconceptions that arise when assessing financial opportunities and risks.
Finally, we offer advice on how to properly manage your mind in the financial markets and on psychology-based investment strategies.
Most of the content in the book is based on actual cases.
By reading this book, readers will be able to identify subconscious biases, understand when and which thoughts enhance or hinder the investment process, improve emotional intelligence, and focus on the decision-making process rather than the outcome.
Making good investment decisions in today's market environment requires basic financial education, but you also need to learn how to manage yourself.
If you use this book as a guide to understand the market landscape and the mental landscape, it will greatly help you improve your overall investment performance.
World-renowned scholars
A book recommended by everyone!
Are you curious about the strategies and qualities that make a great investor? This book is written by a rare translator who combines psychology, neuroscience, and behavioral finance to deliver both insightful and entertaining insights.
- George Akerlof, 2001 Nobel Prize in Economics
Understanding the nature of investing provides insight into how to properly utilize your investment psychology in the decision-making process.
We now have a "psychological investment compass" that points to the North Star of investing.
- Hershey Shefrin, Professor of Finance, Santa Clara University
This book is unique, provocative, and deeply explores the challenges facing investing.
It clearly outlines the psychological problems prevalent in the investment world that pursues high returns.
- Carlo Cannell, Asset Management Committee Member, Cannell Capital LLC
If you have brains, money, and have ever wondered for even a second how these two things affect each other, read this book right now.
The moment you understand the connection between human psychology and money, your investing will completely change.
-David Laneweber, Wall Street financial technologist
It presents a fundamentally new and important way to understand financial markets and our investment activities.
This is a must-read for both professional and individual investors.
- Paul Jacques, Director of the Neuroeconomics Institute
The "Psychological Investment Compass" that Points to the North Star of Investment!
▶ How do people actually behave when investing?
― Psychological biases that have a decisive influence on investment
▶ Why do they act like that?
―Why psychological bias arises
▶ How does such behavior cause you to lose money?
― Losses caused by psychological bias
▶ How can I avoid such behavior?
― Strategies to prevent psychological bias
If you are an investor like this, don't hesitate for a second,
"Study investment psychology before stocks!"
Loss-averse investors who buy and sell dozens of times a day, driven by emotions.
· Confirmation bias investors who feel anxious when holding on and impatient when still
· A "no-loss investor" who sells profitable stocks early and holds on to loss-making ones until the very end.
· "Emotional Buyer" investors swayed by YouTube recommendations, stock market posts, and circulating news.
· A "buhwanodong-type investor" who turns into a bear (seller) in the morning and a bull (buyer) in the evening.
Anxious investors, who lack investment principles and become anxious whenever stock prices fluctuate
· "Impatient investors" who are obsessed with short-term profits despite knowing the value of long-term investing.
Impulsive investors, who prioritize emotions over analysis and make trading decisions within minutes.
· A "blind investor" who pours his heart and soul into a single stock without hesitation!
· A "one-hit wonder investor" who believes that stocks are a one-shot deal and always chases a jackpot.
Human investment psychology
Dissecting the nature of stock investment!
The human brain is hardwired to make decisions in a certain way.
Unfortunately, the way our brains are wired doesn't help us make money in the financial markets at all.
Author Richard L.
No one knows this better than Peterson.
Peterson, founder of Market Psychology Consulting, a provider of investment consulting, a former trader, developer of psychology-based trading software, and investment coach, gained his knowledge firsthand by witnessing how biases, or subconscious mistakes, hinder market participants' financial decision-making.
Now, through this book, Peterson shares his valuable experiences with us.
Drawing on neurofinance research, which applies neuroscience to investment practices, as well as psychology and behavioral finance, Peterson details the biases that are firmly "hardwired" into investors' brains.
Next, we introduce methods to overcome these obstacles and improve your investment decision-making skills.
After introducing the most basic biases common to most investors, using examples such as Long-Term Capital Management, Isaac Newton and the South Sea Bubble, and Mark Twain and the silver mania of the 1860s, the book begins to delve into psychological biases and ways to overcome them.
The human brain
It's not designed to be good at stock investing!
First, the author describes the basic functions of the brain, then shows how ill-suited the brain's workings are to modern financial markets.
We then explain the emotional states and brain chemicals that investors are prone to, how these substances alter financial judgment, and what personality traits are optimal for investing.
Next, we move on to investment-related thinking, introducing common thought traps in investment analysis and detailing common misconceptions that arise when assessing financial opportunities and risks.
Finally, we offer advice on how to properly manage your mind in the financial markets and on psychology-based investment strategies.
Most of the content in the book is based on actual cases.
By reading this book, readers will be able to identify subconscious biases, understand when and which thoughts enhance or hinder the investment process, improve emotional intelligence, and focus on the decision-making process rather than the outcome.
Making good investment decisions in today's market environment requires basic financial education, but you also need to learn how to manage yourself.
If you use this book as a guide to understand the market landscape and the mental landscape, it will greatly help you improve your overall investment performance.
World-renowned scholars
A book recommended by everyone!
Are you curious about the strategies and qualities that make a great investor? This book is written by a rare translator who combines psychology, neuroscience, and behavioral finance to deliver both insightful and entertaining insights.
- George Akerlof, 2001 Nobel Prize in Economics
Understanding the nature of investing provides insight into how to properly utilize your investment psychology in the decision-making process.
We now have a "psychological investment compass" that points to the North Star of investing.
- Hershey Shefrin, Professor of Finance, Santa Clara University
This book is unique, provocative, and deeply explores the challenges facing investing.
It clearly outlines the psychological problems prevalent in the investment world that pursues high returns.
- Carlo Cannell, Asset Management Committee Member, Cannell Capital LLC
If you have brains, money, and have ever wondered for even a second how these two things affect each other, read this book right now.
The moment you understand the connection between human psychology and money, your investing will completely change.
-David Laneweber, Wall Street financial technologist
It presents a fundamentally new and important way to understand financial markets and our investment activities.
This is a must-read for both professional and individual investors.
- Paul Jacques, Director of the Neuroeconomics Institute
GOODS SPECIFICS
- Date of issue: December 5, 2025
- Page count, weight, size: 376 pages | 560g | 153*225*22mm
- ISBN13: 9791163430780
- ISBN10: 1163430781
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