The Little Book of Behavioral Investing by James Montier

Author:James Montier
Language: eng
Format: mobi, epub
Publisher: Wiley
Published: 2010-03-23T21:00:00+00:00

In many ways, 2008 was a case study in financial conservatism. The recession that was engulfing all the major economies was eerily like watching a slow motion train wreck. The head of research at the investment bank I was working at used some of my work to show the analysts that they were always behind the curve and incite them to do better. The analysts seemed to be able to grasp this, and went away to cut their numbers. Of course, the first thing they did was talk to their companies (as if they knew anything more than the rest of us—but that is another story). The companies unsurprisingly said the recession wouldn’t affect them (even the cyclically exposed ones). After hearing this, the analysts came back to us and said, “We can’t cut our numbers!”

The following excerpts from companies’ press releases typified the attitude. The first comes from a company that describes themselves as a specialist in “industry specific solutions (Banking, Human Resources and Real Estate)”:

We have made the right choices in positioning and we have implemented a successful business model fuelled not only by technological development but also by both the trend towards outsourcing and enterprise consolidation. We don’t believe that our business model is subject to a cyclical downturn that is often talked about these days.

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