Most Common Investment Mental Pitfalls

The Top Ten Mental Errors Are:

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

Link found at: http://www.simoleonsense.com/james-montier-on-most-common-investment-mental-pitfalls/

Complete article: http://illusion-of-knowledge.behaviouralfinance.net/Mont02.pdf