Successful asset allocation isn’t all that difficult in theory, but thinking like a successful investor can be a lot trickier than it sounds. This is an assortment of resources for dealing with fear, greed, envy, and other psychological hangups that plague even the most experienced investors.
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Risk Less And Prosper: Your Guide To Safer Investing — Zvi Bodie and Rachelle Taqqu eloquently delve into what risk means not simply on paper but in real life. I personally think their specific investment recommendations leave other good options on the table, but I appreciate the discussion on risk tolerance versus risk capacity and how you can get into trouble when your emotions and needs don’t match up.
Why Smart People Make Big Money Mistakes And How To Correct Them — Gary Belsky and Thomas Gilovich discuss the myriad of psychological biases and hang-ups that make otherwise rational people make highly irrational decisions. Full of interesting anecdotes and actionable advice, this is a classic guide to understanding how investors think.
Behavioral Finance: The Psychology of Investing — A remarkable white paper by Credit Suisse that covers the behavioral biases and cultural influences that affect investing behavior way more than rational economists want to admit.