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Sucker for a story, or, Why you should never buy an IPO
Anyone who has attended one of my behavioural finance speeches will probably have heard me talk about the dangers of stories (Chapter 15 of Behavioural Investing) , and use IPOs as an example. I point...
View ArticleSomething the Boglehead wouldn't want you to know, or index investing isn't...
Just for the record, Bogleheads are die-hard devotees of index investing. Occassionally someone will mistake my criticisms of much of the active management industry for support of the Bogleheads'...
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Yet more evidence on the folly of forecasting, or why we don't need economists!
First a quick comment on the change of colour scheme. Multiple readers have told me that they struggle reading the white font on a background. To make life easier I have switched to this format. Let me...
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Are finance professors overconfident?
I wasn't going to post this week, as I have a couple of other things on. However, this paper arrived in my inbox and I couldn't resist the urge to flag it up to you. Professors Doran, Peterson and...
View ArticleThe myth of exogenous risk and the recent quant problems
Regular readers of my work will know that I am deeply skeptical over the idea of exogenous risk (like a gambler playing roulette, where the behaviour of other players is irrelevant). In Chapter 36 of...
View ArticleThe book is out
I'm delighted to say that Behavioural Investing was published on Friday. It is available from amazon at a £20 discount to the RRP. It is a slighter longer than I had envisioned, weighing in at 705...
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Sector rotation: an investment dead end?
Two chapters in Behavioural Investing suggest that investors focusing on sectors rather than stocks are barking up the wrong tree. Chapter 32 outlines the evidence showing that value and momentum...
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The Sources of Value
It is one of the established 'facts' of finance that value outperforms growth over reasonable time horizons (see Chapters 22-34 of Behavioural Investing). However, which of the component sources of...
View ArticleThe little book that makes you rich: A critical analysis of the fundamental...
Firstly apologies for the recent lack of posts, I've been enjoying a sojourn visiting some of my family in New Zealand. I've recently been reading Louis Navellier's 'Little Book that makes you rich'...
View ArticleThe little book that makes you rich: what is really going on?
In my last post I questioned the long term relevance of some of the fundamental factors outlined in the Navellier's Little Book that makes you rich. However, I also noted that all eight of these...
View ArticleAn update
Many thanks for visiting my blog. I have now returned to work full time with Soc Gen. I'm afraid I will not have the time to update this blog. My thoughts on behavioural finance and value investing...
View ArticleI'm BAAAACK
Can't believe that it has been over two years since my last blog post! The good news (if you like my writing) is that I'll be posting the odd comment on this blog once again. As ever, I'll only post...
View ArticleBarbie does economics
Barbie does economics!The sheer hubris of many in the economics profession never ceases to amaze me. Take for instance a recent paper by Kartik Athreya of the Federal Reserve Bank of Richmond[1]...
View ArticleOn the price of insurance and the bull market in tail risk
From the people who bought you such wonderful ideas as CDOs, now comes the bull market in tail risk products. Deutsche are launching a long equity volatilty index, Citi has come up with a crisis index...
View ArticleIs Austerity the Road to Ruin
My latest paper for GMO: Is Austerity the Road to Ruin can be found here:http://www.gmo.com/orhttp://www.scribd.com/doc/34895648/GMO-Montier-26JulVery interesting response to this paper, I have rarely...
View ArticleBanks and Basel 3: Asking kids to mark their own homework
One of my colleagues sent around a bloomberg article which stated that Westpac (the Aussie bank) had opined that the Basel 3 rules were flawed and risked constraining lenders! Wasn't it unconstraining...
View ArticleGuess who?
Which 'superficial' blogger (see http://behaviouralinvesting.blogspot.com/2010/07/barbie-does-economics.html) dared to utter these wonderfully insight words?"The completeness of the [orthodox] victory...
View ArticleReports of the death of mean reversion are premature
This was originally written for the FT, but they seem to have gone the same way as so much media and are dumbed down these days - they said it was too technical (after sitting on it for more than a...
View ArticleLatest paper - A man from a different time
My latest paper - A man from a different time - on dividends and dividend swaps is avialable from www.gmo.com
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Bond bubble- a sterile debate on semantics
Much ink has been spilt over the question of whether government bonds are in a bubble or not. The bond bubble believers love to cite stats along the lines that bonds are witnessing inflows at the same...
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