The Indomitable Investor: Why a Few Succeed in the Stock Market When Everyone Else Fails
Steven M. Sears
Format: PDF / Kindle (mobi) / ePub
A new approach to investing based on how Wall Street insiders approach the market
The Indomitable Investor deconstructs the stock market as the public has come to know it and reconstitutes it from the inside out from the perspective of the fortunate few who dominate Wall Street. By revealing how top investors and traders think and act Steven Sears shows the stock market to be an undulating ocean of money, with seasoned investors reading the waves others cannot.
Teaching readers to think about the market in radically different ways, The Indomitable Investor shows how to improve returns—and, just as importantly, avoid losses—with disciplines deployed by people who almost always do exactly the opposite of what Wall Street says to do.
Laying bare great fallacies, the book explains that non-professional investors wrongly think the stock market is a place to make money, which is what Wall Street wants them to try to do. The Indomitable Investor says otherwise and shows how Wall Street's best investors have a completely different focus.
- Explains the critical ideas and insights of top traders and investors in language anyone can understand and implement
- Packed with material rarely shared off Wall Street that is used every day by professional investors
- Introduces the 17 most important words on Wall Street
- Teaches critical skills, including: How to increase returns by focusing on risk, not potential profits; how to use the stock market's historical patterns to optimize investment decisions; understanding key relationships between stocks and the economy that predict what will happen to stocks and the broader market; how to increase mutual fund returns with an easy adjustment that redirects the bulk of profits to you—not mutual fund companies, and how to analyze information like seasoned investors to move beyond "statement of the obvious" news reports that turn ordinary investors into Dumb Money
Accessible to readers of all backgrounds, including those with a limited understanding of investing, The Indomitable Investor will change how investors view the stock market, Wall Street, and themselves.
his favorite investment period,” burnishes his well-deserved halo and blurs the facts. Buffett says very little about selling stocks or bad investment decisions. He leaves that to regulatory documents that his company, Berkshire Hathaway, ﬁles with the Securities and Exchange Commission. Those reports are much drier and harder to read than his shareholder letters the ﬁnancial media loves to hype. c02.indd 34 28/02/12 7:32 AM Greed 35 The truth is that buy-and-hold investing is not as easy
groups. c06.indd 125 25/02/12 2:13 PM 126 t h e i n d o m i ta b l e i n v e s t o r But the Massachusetts Pension Reserves Investment Management Board does is not similarly conﬂicted. The fund has a simple mandate: increasing returns on the almost $47 billion under management. In August 2008, in the midst of the credit crisis, the pension fund ﬁred ﬁve active-fund managers for poor performance. Money was taken from Legg Mason, Gardner Lewis, NWQ Investment, Mazama Capital, and Ariel
their models because their compensation is tied to that worldview. After the credit crisis began in 2007, some derivatives traders were asked to review the models used by ﬁxed-income mortgage traders to securitize subprime mortgages that were sold in bundles to other investors. One of those traders said he found variables—such as interest rates or default rates on loans—were actually ﬁxed rates, which proved to be a costly mistake because interest rates change and some people stopped paying their
now out buying emerging-market stocks. What has to happen—and it will happen—is that some people who have moved up this risk ladder will lose a lot of their money and they will move back.16 c08.indd 162 25/02/12 2:16 PM Behavior 163 If recent history is a reliable guide, the move back to safer parts of the risk ladder is temporary. No one wants to miss the chance to make money, or recoup losses. Besides, as dealers say in the stock and options market, losers always come back to Las Vegas.
business professor, says savings rates may be inﬂuenced by an inability of people to relate to themselves in 50 years. Research shows that people care more about the present outcomes than the future, a condition psychologists call temporal discounting. Savings, which requires giving up today something for tomorrow, is an intertemporal choice.34 Hershﬁeld has developed a software program that shows people what they might look like in the future. He is working with Allianz, a major global ﬁnancial