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Seven Sins of Fund Management
By InvestingNook  •  October 19, 2019

Over a decade ago, James Montier penned a white paper titled Seven Sins of Fund Management. It covers the most common behavioural biases among investors and makes for a timeless, enlightening read. While the full report is 105 pages long and can be found here, we will be summarising this report in this article today.

Sin 1: Forecasting

An enormous amount of evidence suggests that we simply cannot forecast. Montier suggests that anchoring bias and over-confidence cause investors to continue relying on forecasts in their investment decisions.

Sin 2: The illusion of knowledge

Investors appear to believe that they need to know more than everyone else in order to outperform. This stems from an efficient markets view of the world. If markets are efficient, then the only way they can be beaten is by knowing something that everyone else does not. This is paradoxical because it is the pockets of inefficiency that allow

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By InvestingNook
As Co-Founder and Fund Manager of Heritage Global Capital Fund, we started InvestingNook as a website dedicated to sharing the knowledge of value investing – allowing our readers achieve an edge over the markets with the knowledge of value investing.
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