In Beat the Crowd, Ken Fisher shows how you can invest smarter by thinking differently, cutting through the noise and avoiding the crowd’s oft-repeated mistakes.
Why does the crowd get markets wrong more often than not? Sometimes, it’s because their brains trick them, either with political biases or other behavioral traps. Other times, it’s because they forget markets pretty efficiently price in widely known information, and they let false fears drive investment decisions. Here are just a few of the pitfalls covered in the book:
1. Assuming one political party or ideology is best or worst for stocks—tempting, and easy to do, but what if they’re all just a bunch equally self-interested politicians?
2. Letting headlines drive your decisions—our noisy 24/7 media makes a living selling fear, and they love saying everything from wobbling economic data to disease scares and regional conflict will be the death of stocks. But what if stocks have already priced in whatever fear they’re selling?
3. Believing dreary long-term forecasts endanger stocks today—pundits argue over whether things like retiring Baby Boomers, US debt, global warming and income inequality will doom investors in the long run. But are stocks really looking that far out? Do they care about pure sociology?
4. Forgetting history—our financial memories are terrible. Old panics, bear markets and volatility are lost to most folks. But the past is important and holds the keys we need to navigate the future.
5. Missing the elephant in the room—often the truth is simple and staring us in the face, but we can’t see it because we’re too caught up in the noise.
6. Extrapolating the recent past forward—is the trend really your friend?
To avoid these and other pitfalls, Beat the Crowd guides you through real-world issues past, present and future, showing you how to train your brain to see what everyone else misses. Thinking differently isn’t hard, and it doesn’t take a finance degree or years of classroom training to do it. All you need are a few basic tricks and sharpened instincts to question media hype and things “everyone knows.” This book teaches these principles and how you can apply them and start making better investment decisions today.