Posts Tagged ‘Your Money and Your Brain’

Books that will help gain sanity in insane market – Part 2

Courtesy of Vitaliy Katsenelson

I originally wrote this list of recommended books last year; recently I updated and added a few more.  I hope to keep adding to it every year.  It contains six sections: Selling, Think Like an Investor, Behavioral Investing, Economics, Stock Market History, and Books for the Soul.  Due to its length, I divided it into two parts.  You can read part 1 by clicking here

Behavioral Investing

The right temperament is crucial in investing. Being a critical thinker and knowing how to value stocks is important, but it is all a waste if your emotions get the better of you. The following books will help you to recognize the shortcomings of your hard-wiring and help you to devise strategies to deal with it.

Psychology of Investing, by John R. Nofsinger, is short and to the point. You’ll become an expert on behavioral investing in about an hour. Well, not quite, but close.

Why Smart People Make Big Money Mistakes And How To Correct Them, by Gary Belsky and Thomas Gilovich.  This is a fun and easy read. It also addresses how shortcomings in our wiring impact money decisions, like buying cars and stereos.

Your Money and Your Brain, by Jason Zweig, is another selection. I have to admit that the two books above cover many topics in this book (though this one offers new angles and insights) and are likely to be more exciting reads, but Chapter 10 is what makes this book a must-read: it addresses happiness – yes, happiness. Although, as most of us know, money doesn’t buy happiness (unless you are starving or living on the street), money spent on acquisitions – things – brings a burst of happiness that quickly fades away. Think of your level of happiness when you bought the car of your dreams. Money spent on experiences – being – brings a higher utility of happiness. Recollecting experience brings happiness. I plan to reread this chapter at least a couple of times a year. Zweig also provides a list of things you can do that will make you happy, and none of them require you to spend a penny, which is a big positive in today’s economy.

Reminiscences of a Stock Operator, written in 1923 by Edwin Lefevre, tells from a first-person perspective the fictionalized tale of the early years of the great trader…
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