Outsmarting the Smart Money : Understand How Markets Really Work and Win the Wealth Game (Hardcover)

~ (Author) "The United States is richer than ever, yet also more financially illiterate..." (more)
Key Phrases: efficiency story, investor alert, seasoned equity offerings, Rite Aid, United States, New York Stock Exchange (more...)

Editorial Reviews

Product Description

How to invest using straightforward common sense instead of misleading"hot tips"

While market pundits argue the rational market theory, one theory gets almost universal consensus­­that of the irrational investor. Outsmarting the Smart Money outlines where most investors go wrong and explains how to instead approach the markets with intelligence and calm. Filled with hard-hitting insights and useful lessons, it shows how to use market-proven techniques and strategies to overcome biases, myths, and mistakes­­and beat the pros at their own game. Cunningham presents flexible security analysis guidelines for investors who want to guide their own portfolios, but don't want to devote all of their free time to the effort including:

• How to overcome personal biases, misleading information, and market inefficiencies
• Methods to avoid being cheated by money managers, and identify "spin" reporting

From the Back Cover

Forget Almost Everything You've Ever Learned About Investing...

Most investors­­despite the fact their hard-earned savings are on the line­­fall victim to human nature and bet their financial futures on hot tips, headlines, and Wall Street spin. Outsmarting the Smart Money instead provides investors with authoritative insights and hands-on lessons for moving beyond emotions and unreliable guesswork to build a portfolio based on market-proven strategies, simple-to-understand analytical techniques, and a history of long-term performance.

Praise for Outsmarting the Smart Money...

"Individuals too often focus exclusively on the mechanics of investing without considering the mistakes that occur from emotional, but predictable, missteps. Larry Cunningham has done a great service by explaining the psychology of investing in clear and easy to understand principles."­­Robert G. Hagstrom, CFA, Senior Vice President, Legg Mason Funds Management; Author, The Warren Buffett Way

"This book is a fascinating account of market psychology, of how professionals lose their shirts because of it, and of how a small investor can profit from it. A fun, useful and readable book."­­Andrei Shleifer, Professor of Economics, Harvard University; Author, Inefficient Markets

"Outsmarting the Smart Money reveals the many foibles of today's markets, and provides sound strategies the typical investor should pursue to achieve security and profits."­­James D. Cox, Brainerd Currie Professor of Law, Duke University

"An exploration of the ways our psyches play financial tricks on us, Outsmarting the Smart Money will return its cost many times over."­­Gary Belsky, Author, Why Smart People Make Big Money Mistakes­­And How to Correct Them

"Lucid guidance for investors dealing with the post-bubble investment world, while also preparing them for the next period of irrational exuberance."­­Steve Galbraith, U.S. Equity Strategist, Morgan Stanley

"We have met the enemy, and he is us."­­Walt Kelly's Pogo

Like it or not, most investors are their own worst enemies. They buy only when glowing reports and rumors have bid stocks to outlandish, unsupported price levels; sell only when bad news has left stock prices at or near their bottoms; and ignore reams of independent research and data to bet thousands of dollars on a coworker's hot stock tip.

Is it any wonder that stock investing, which should represent one of the easiest and most straightforward paths to long-term wealth, has instead become a hotbed of wasted hours, lost opportunities, and outright misery?

Lawrence Cunningham's Outsmarting the Smart Money outlines where most investors go wrong and explains how to approach the markets with self-knowledge, intelligence and, most of all, calm. It examines the cognitive biases that afflict most investors, discusses how professional money managers are trained to take advantage of these biases (and the pricing inefficiencies that regularly result), and reveals how investors can help themselves by steering clear of the "smart money" to adopt a long-term, value-oriented investment philosophy.

Outsmarting the Smart Money offers you dozens of easy-to-follow tips and techniques for investing both sensibly and successfully, including:

• How the market really works, and why the safest ways to use it to your advantage are actually also the easiest
• The folly of investing in initial public offerings­­and how and when IPOs actually can present valuable opportunities
• Accounting games and gimmicks that managers use to hide information and mislead investors
• The differences between price and value­­and how to ignore the former to focus on the latter
• Techniques for understanding­­and overcoming­­personal investment biases and shortcomings

Thousands of books promise to tell you how to beat the markets by grabbing the low-hanging fruit of fast turnaround profits. But only Outsmarting the Smart Money tells you the truth­­that long-term investment success requires time, self-knowledge, and discipline. Follow its simple step-by-step program to become a more intelligent investor, and construct a sensible long-term portfolio that is solidly constructed, easy to manage, and virtually certain­­given time­­to grow into a sizable fortune.

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Product Details

• Hardcover: 288 pages
• Publisher: McGraw-Hill; 1 edition (April 15, 2002)
• Language: English
• ISBN-10: 0071386998
• ISBN-13: 978-0071386999
• Product Dimensions: 9.3 x 6.4 x 1 inches
• Shipping Weight: 1.3 pounds
• Average Customer Review: 4.1 out of 5 stars  See all reviews (9 customer reviews)
• Amazon.com Sales Rank: #1,185,361 in Books (See Bestsellers in Books)

Customer Reviews

Most Helpful Customer Reviews

8 of 8 people found the following review helpful:

5.0 out of 5 stars Barron's Is Right: Top Book of 2002, January 25, 2003

By A Customer

I read Cunningham's book based on the review in Barron's rounding up the best investment books of 2002. They were right. The book is a eye-opening intro to the psychology of investing, important to investors and market observers/regulators. (Cunningham's other books have more of the basics for investors--also very good books.)

6 of 6 people found the following review helpful:

4.0 out of 5 stars Mind-field, June 21, 2002

By	dennis wentraub (schenectady, new york USA) - See all my reviews (REAL NAME)

Amazon Verified Purchase

In a perfect investment world the price of a stock embodies its value. And those who believe this 'efficient' market hypothesis will be buying index mutual funds certainly not this book. But those who dismiss this academic construct to profit from the inefficiencies evident in the market still run substantial risks not adequately addressed by most investment books. The minefield of risks that Cunningham guides us through is that the biases of others, the cause of those price vs. value anomalies, are also our own biases and can trigger money-losing investment decisions. Overconfidence and the "pattern seeking" bias to project short term trends into the future are just two examples, but they do so some of the worst damage. They lead to a dangerous reliance on margin borrowing and excessive trading activity. Also, recognize that companies make many of the same behavioral errors. It is the author's "smart" investor who can spot the folly of manic acquisitions by companies acting as if they were on steroids - grasping for growth at a fiscal cost. Cunningham dismisses technical analysis as "hokum" (Here he agrees with the proponents of an efficient market who maintain market movements cannot be predicted accurately). Stay away from IPO's, companies relying on pro-forma accounting, and sector funds. Read analyst reports with caution, but do study closely "management's discussion" of their business in the annual report. Be wary of stock buybacks, stock option programs, stock splits, spin-offs, secondary offerings, and performance-based incentive plans. Any of these programs can be abused and rise out of corporate hubris. Above all: Recognize your biases, your tolerance for risk, be objective, and have criteria to know when to sell your positions. A lot of territory is covered in this book with some of the best material appearing in Chapters 10 and 11. Cunningham builds a persuasive case for adopting a long term, value oriented investment philosophy which is least affected by these biases.

2 of 2 people found the following review helpful:

5.0 out of 5 stars Tulsa, OK, May 25, 2002

By	Bobby Buckmaster - See all my reviews

Makes you think. Straightforward points as to investing slip ups I've made and some I now know I better be on the look out for. The chapter on "Living with Emotions" is worth the price alone. It is the whole package--key points of dealing with our conflicting goals of (a) generating high returns and (b) sleeping well at night. I feel I'll be better able to do both, having read this delightful read.