Outsmarting the Smart Money

Author:

Lawrence A. Cunningham

Publisher:

McGraw Hill Education

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Publisher

McGraw Hill Education

Publication Year 2002
ISBN-13

9780071386999

ISBN-10 0071386998
Binding

Hardcover

Number of Pages 288 Pages
Language (English)
Dimensions (Cms) 23 X17 X 2
Weight (grms) 598

This volume looks at how investors can rethink their learning about investments. The author argues that many investors are inadvertently building their portfolios on shaky foundations, based on preconceived notions about the markets, misleading and exploitative information and a lack of knowledge and understanding. This book aims to help readers recognize where the dangers are and how to avoid making costly mistakes. Despite claims that the stock market is efficient and rational, Cunningham asserts that investors actually operate in a world that is full of messy decision-making. In fact, emotions, biases and behaviour all play an equal role with cold analysis and probability theory. Loss aversion, frame dependence and probabilities combine to make investing a challenging undertaking. In order to succeed, investors must outsmart the "big money" and become smart investors themselves. The first challenge is overcoming the biases and misconceptions that shape them. Cunningham shows that behavioural baggage often means that investors are actually drawn toward opportunities that exploit them. Because of that, it is easy for insiders and "the smart money" to take advantage of investors. Cunningham explains why it is important for investors to understand the biases that put them at a disadvantage. He shows how investors can learn to avoid succumbing to the spin in various business and financial reports. And, he reveals how important it is to wake up to market inefficiency and how this inefficiency is exploited by financial professionals. In doing so, he aims to give readers the tools they need to think for themselves and invest for the long term. This book provides a useful source for learning about the behavioural forces and cognitive biases that affect investment strategy.

Lawrence A. Cunningham

Lawrence A. Cunningham is author of The Essays of Warren Buffett: Lessons for Corporate America, an Amazon.com best-seller for which Buffett granted exclusive publication rights of his famous letters to the shareholders of Berkshire Hathaway. Professor Cunningham is a leading expert on corporate governance, serving as the Director of the Samuel and Ronnie Heyman Center on Corporate Governance at Cardozo Law School, where he also is a Professor of Law. Previously, he was an associate with Cravath, Swaine & Moore, where he practiced corporate and securities law. A frequent lecturer, he has help appointments at The George Washington University, Fordham University, and Oxford University, among others, in addition to speaking to investor groups in London, Toronto, and throughout the United States. Professor Cunningham has been featured in various media, including Forbes, Money, CNN, The News Hour with Jim Lehrer and The Motley Fool Radio Show. He graduated magna cum laude from Cordozo.
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