Part man, part monkey

This excerpt is from James Montier, who at the time ( 11.22.2002 ) was with Dresdner Kleinwort Wasserstein and is now with SocGen in London.

The 10 page pdf can be read here http://tinyurl.com/d927rz and we suggest re-reading it at least annually.

This piece was titled "Part man, part monkey" enjoy. (9)

"Leaving the trees could have been our first mistake.
Our minds are suited for solving problems related to our survival, rather than
being optimised for investment decisions.
We all make mistakes when we make decisions.
The list below gives a top ten list for avoiding the most common investment mental pitfalls.

1 You know less than you think you do
2 Be less certain in your views, aim for timid forecasts and bold choices
3 Don't get hung up on one technique, tool, approach or view - flexibility and pragmatism are the order of the day
4 Listen to those who don't agree with you
5 You didn't know it all along, you just think you did
6 Forget relative valuation, forget market price, work out what the stock is worth (use reverse DCFs)
7 Don't take information at face value, think carefully about how it was presented to you
8 Don't confuse good firms with good investments, or good earnings growth with good returns
9 Vivid, easy to recall events are less likely than you think they are, subtle causes are underestimated
10 Sell your losers and ride your winners "