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on December 22, 2012
I liked this book a lot. One of the first things mentioned in this book is a problem that I, and I have to assume many traders, deal with. It is the issue of selling too early, leaving "money on the table" and exiting a trade before it hits your designated sell zone or before it comes to fruition. The author admits (and I appreciate the honesty) that this is a problem that he has grappled with and still deals with. The author suggests that this issue is tied into shame and regret. In other words, there is a sense of shame that develops from having had a profit turn into a loss and obviously, along with that, there is a sense of regret. In my case, I'm not really tuned into a sense of shame, but the regret issue truly strikes a chord. Later in the book the author does implement strategies that deal with these issues. I have always felt the psychological component to be the most important part of the trading equation, but the author states that an edge in the markets is composed not only of a mental edge but also the ability to see patterns and to see them in a way in which they are not seen by the crowd. There are multiple illustrations of real trades and the explanations behind these trades. The author is a successful investor and once worked for George Soros as well as Karsch Capital Management. He now works for himself and manages his personal wealth. In the world of professional performance (investments, athletics, entertainment, etc, I do tend to listen a bit more to someone that has hands on experience. This may be a flaw, I realize that many with no experience in a particular discipline can teach us a lot about that discipline, but I guess what I'm trying to say is that it's interesting to hear from a player and not someone in the dugout).

The book starts by stating that "self awareness" is perhaps one of the most important characteristics that any trader can have. The entire book seems to be based on the premise of, "trader, know thyself". So, what kind of trader are you? Are you a value player that can withstand a stock trading against you for quite a while or are you a short term trader trying to catch the "ebbs and flows". Is your analysis more Macro based or are you comfortable with reading and interpreting charts? Speaking of charts, the author states that he used to look at charts as "voodoo", but has since changed his mind/attitude toward them and now states that charts can give very important psychological information about the types of traders/shareholders involved with a particular equity. His take on charts I found particularly interesting. His interpretation of support and resistance and what it is that brings these about is for me worth the price of the book. I again appreciated the author's honesty in admitting that he once thought charts were almost absurd but now states that any trader that is not aware of at least the basic aspects of support/resistance, euphoria spikes and panic sell-offs, is at a disadvantage. I've always thought it obvious that the lines on a chart hold significant information. So the aspect of self-awareness is critical because if you don't find out what type of trader/investor you are it is somewhat like endlessly trying to fit a round ball into a square hole.

There are many moments while reading this where I recognize that the author is talking about an issue or a subject that has been spoken of before, but he has a different perspective with which I'm not familiar and it just "feels right". Ironically, a significant portion of the book has to do with intuition and developing this special "feel". It is the author's contention that without this feel the trader/investor is at a disadvantage. Where he differs in what I've read before is that he states that intuition, long thought to be some mystical sixth sense, is really the mind recognizing with great speed something it has seen before. It's just that it happens so quickly it seems almost mystical, but it is more the sensing of a pattern with which we are familiar. The author states that intuitive power can be developed, but that it takes effort and time. From what I can see, there are two important modes of development. One is to use visualization and this is explained in detail in the book and the other is keeping a journal. The author is big on diary keeping and journaling. He states that there is empirical evidence as to the positive effects of writing about our trading experiences or for that matter writing about life. He equates journaling to professional athletes watching film and gathering information on what works and what doesn't work all the while keeping in mind the conditions under which these successes and failures take place. He also notes intensely that what works now, the "edge" so to speak, can last for a short duration or many decades. You get the feeling that the edge that can't be taken away is the mental edge. Fundamental and technical edges last only as long as they take to be noticed and implemented by "the crowd". As I said, this can be weeks or decades. The real edge, from what I can see, is mental preparation and the ability to apprehend patterns and to empathize with the other players in the markets. How are patterns noticed? This is delineated in the book and part of it has to do with "deliberate practice". The author near the end of the book analogizes market mastery with chess grandmasters. I found this especially interesting though, as the author states, the comparison begins to break down as the market presents us with an element of randomness/luck that he believes chess does not have or at least does not have in the same way. He gives illustrations of market randomness, how money can be made via pure luck and he addresses what he believes can counteract randomness. To me, this is extremely dangerous because as our luck grows so does our confidence and so does our position size and, well, we all know where this can end. All in all, this is a book well worth adding to your trading library. There's just tons of great information within it. I hope this review helped a little.
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on March 19, 2013
BACKGROUND: Similar to the author, I invest for a living, focusing primarily on tech stocks. My assessment is written from the perspective of someone who lives/breathes investing and is constantly looking for ways to perfect my trade.

QUICK ASSESSMENT: I would strongly recommend this book to any individual who is looking to improve their investing skills, ranging from an aspiring investment professional to those simply managing their IRA/401K. The author provides actionable advice for value and growth investors alike. I only wish I would have had this resource available to me when I started my career as a junior research analyst!

A LITTLE MORE DETAIL: The author, Ravee Mehta, has a clear sense of how core financial analysis and research skills, combined with a strong work ethic, can positively contribute to generating attractive investment returns. Luckily for the reader, we are not forced to rehash a set of topics for which there are countless, great reads. Ravee recognizes that these "hard skills" are (relatively) easy to replicate. Therefore, "investment edge" is likely sourced elsewhere. He identifies a set of "soft skills" that are more difficult to define, and as a result teach. That said, Ravee adeptly proceeds to lay out an easy-to-follow and instructive dialogue on how an investor can understand and improve their soft investment skills, which include self awareness, empathy and intuition.

While the premise of the book is itself unique, brilliance is found in the manner that the author addresses these seemingly nebulous concepts (i.e. self awareness, empathy and intuition). The author supports his explanations with numerous real world examples, which is especially helpful in Chapter 8, "Demystifying Technical Analysis". Additionally, the author often provides examples of how he has improved his investor skill set through various activities (i.e. he ends each market day with a few comments in a journal).

From a reader's perspective, not only are there lessons to be learned, but you walk away from each chapter with a game plan (i.e. to hone my self awareness and avoid replicating my mistakes, I can do X, Y and Z). When you complete a book and now reference it as a "resource", you know you've found a gem.
13 people found this helpful
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on August 24, 2013
Knowing others is wisdom, knowing yourself is Enlightenment.
Lao Tzu
We all heard these kind of quotes and had a vague understanding of their meaning and thought of them as some "metaphysical statements". Even worse, when mentioned in investing/trading books, we wonder what could be the relationship between these abstract "words of wisdom" and the "real" world of investing/trading? This book explains -in concrete terms and with specific examples- the meaning and importance of "SELF-AWARENESS" and "SOCIAL-AWARENESS" (knowing yourself and knowing others) and how this knowledge can help you prosper financially and avoid traps that can save your trading account from disaster.
"SELF-AWARENESS" uncovers our defense mechanisms that we -humans- use to hide our feelings of shame, regret, and fear and the book shows you how your weaknesses can be reflected in your trading/investing and how to avoid that. It shows you how you can either be your worst enemy or best ally by being aware of the emotional biases and how to avoid them in order to give your trading career a better chance for success. In addition, by knowing oneself, one can find his/her investment style that best fits his/her personality.
In addition to "SELF-AWARENESS", the author stresses out the importance of "SOCIAL-AWARENESS". He describes how through empathy, the investor can develop an investing edge. He explains how this "empathetic edge' helped him and can help investors dig for clues that will lead to successful investment decisions.
Being able to empathize with the "shareholders base", the potential buyers and short sellers of any security can give the investor an investing edge. The author gives many examples how he used this principle of empathy to succeed in his own investments. Also, being socially aware can give the investor clues about the company's management, what they really think about the firm's business prospects, and get a "feel" of their trustworthiness.
The last part of the book explains "Intuition" and how to "build" it. It dispels the myth that intuition is a "god-given gift" or some "magical sixth sense. It explains that intuition is developed by experts through recognition of patterns. Also, experience is not enough to develop expertise. It must be coupled with "reflection" on experience itself through what the author calls "deliberate practice" (which the author borrows from Geoff Colvin). Only through "deliberate practice" (through reviewing and journaling) can the investor/trader develop a useful and safe intuition. And here, the author warns us to use the intuition safely by backing it with logical and rational reasoning and he mentions several ways to test its reliability.
One of the important points in the book is that the three abilities, namely Self-awareness, Social-Awareness, and Intuition can be enhanced through introspection, reflection and social observation. These abilities are not "fixed" like some character traits that we inherit and can be bettered with continual effort.
Finally, this is an excellent book and I would like to thank Mike Bellafiore author of "The PlayBook: An Inside Look at How to Think Like a Professional Trader" for recommending Mehta's book in several occasions. He motivated me to read the book and learn from it.
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on May 12, 2016
Adding the emotional side to the cerebral side of the investment process is essential. Very few of us really can detach themselves from the emotional process that take place in the investment process. This book links us to it , without judgment. It shows how one strength and weakness are another tool for us to use in the process. A "Judo" guide for te mined.
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on December 23, 2012
Very insightful and thoughtful book. I am a professional money manager and for years have "felt" these concepts to be true, but until Ravee articulated in such a coherent and well-organized book, it seemed like something was missing...His thesis that emotion and intuition play pivotal roles in the investment process of the most successful money managers will prompt others in our field to take a closer look at this critical component of an optimal process. My only fear is that some of his ideas get "arbed out" of the markets before I get to them! In all seriousness, his interwoven approach that combines both theory and practice is quite innovative. His recounting of real-time examples from his own recent trading is quite valuable to learn from his mindset and viewpoints. In addition, his book is geared at those actually managing money, and so it differs from much of the behavioral finance literature that is more theory-based...HIGHLY recommend this book for professionals and individuals looking to improve their investment process and results.
6 people found this helpful
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on June 18, 2013
An outstanding book, useful for both amateurs and professional. There is no ideal style of investing. You need to be aware of your own emotional make-up and style of investing suitable for your emotional needs. It is also important to empathize with other market players, and, what is driving them. Combination of self-awareness and empathy of others could help you device your own unique style of investing.

The author appreciates all major systems of investing: Benjamin Graham's value investing ( buying cheaply), Warren Buffet's companies with sustainable competitive advantage/moat, Peter Lynch's personal observation system for spotting growth companies and, lastly, market momentum/technicals based style. He advises you to customize your own system compatible with your emotional drivers.

Importance of empathizing with others' thinking and feelings by witnessing and analysing dominant patterns, judiciously combined with analysis of business fundamentals, and, self-awareness, seem to be way to go. Neither fundamentals, nor, technicals, could be disregarded.
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on March 26, 2013
Being a professional investor for the past decade or so, I am constantly looking to improve and refine my investing philosophy and process. One way I do that is by reading as many investment related books as I can. Though I still have quite a few books on my wish-list to read and I keep adding to that list as and when I come across anything interesting. I believe that while most investors focus on information and analysis for having an edge over the market, it is as much if not more important to have an emotional edge over the market to be able to truly generate exceptional returns over time. Hence any book that delves into this topic always fascinates me and helps me prioritize what I should be reading. That was the primary reason I got interested in the book in the first place when I came across it thru my Amazon recommendations engine. From there I googled the Author and found his blog which had some more detail on what the book is about, the author's investing process and a few examples. I bought the book and finished it in a few days (usually takes me much longer than that to finish reading a book). Also, by definition one comes across very few books amongst the many that one reads which truly leads to a leap in ones learning and development. In investing, I can think of Intelligent Investor (by Benjamin Graham), Margin of Safety (by Seth Klarman), Buffett: The Making of an American Capitalist (Roger Lowenstein) that has had a profound effect on my investing philosophy and process. I would put this book in that short list that has helped my investment process immensely. While there are many books that touch on the topic of behavioral finance and some of the emotional biases one encounters while investing, this book truly is about putting a process around how to recognize those biases in ones own investing process and also in using empathy to figure out how those biases might be affecting the market participants and possibly taking advantage of that by identifying undervalued investments. That is what makes the book unique especially since it is written by someone who has multiple years of investing experience with respected investment firms.

The book is an easy read, simple and to the point. It is also well organized. The first part talks about self awareness which elaborates on the importance of knowing your own personality traits (thru self-reflection) that might make one more susceptible to a certain types of emotional biases or errors. The second part talks about social awareness which basically says that just like an investor goes thru fluctuations in feelings and moods due to the volatility in the market, so are the other market participants who are also going thru similar fluctuations and are exposed to emotional errors. As an astute emotionally intelligent investor it is good to go be able to have the empathy to recognize what the other participants in the market might be thinking and feeling so one can possibly take advantage of that. The third part talks about intuition and how one can use certain imagination and visualization exercises to get the most out of their past experiences by using concrete examples of how intuition can be developed. In the final part, the author puts all the pieces together by giving a few recommendations that helps one improve decision making.

To conclude, investment literature is filled with how one can become a good investor by using quantitative and qualitative techniques to rationally and objectively analyse a potential investment opportunity. While there are some books on behavioral finance, most of them have an academic bent to them without much insight as to how one can incorporate the "touchy feely" stuff into one's investing process. This is the first book that I have come across that does an excellent job at not only recognizing that emotions and intuition are inseparable from objective analysis but also how one can use them to one's advantage and become a better investor.
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on March 22, 2015
An interesting approach with regards to investing. Sometimes we get hung up on past performance, statistics and growth charts. It is important to look within ourselves, and inventory why we are investing, what do we like about a stock or a company. Is our mood for the day one of frustration, tranquility or confidence? Interesting to learn how our moods can play into our investment decisions, or reactions to the market. Good read with some valid points of interest.
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on January 22, 2018
I found this to be a good book. It starts with “know thyself”. Become self aware regarding how one feels about risk and rewards.

Written for institutional investors primarily but quite applicable for the individual investor.

It includes many great questions, tips, and checklists.
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on August 16, 2015
New insight into the emotions related to investing. For those who have not thought about this topic it will be an eye opener & improve investing results. It will help the rest of us too.
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