You are previewing Snap Judgment: When to Trust Your Instincts, When to Ignore Them, and How to Avoid Making Big Mistakes with Your Money.
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Snap Judgment: When to Trust Your Instincts, When to Ignore Them, and How to Avoid Making Big Mistakes with Your Money

Book Description

"Adler’s argument is illuminating and reveals that, when it comes to investing, we should always have second thoughts about our first impressions."

--Publisher's Weekly


“David Adler’s Snap Judgment is a well-written, entertaining review of human action in risky situations, including stock market behavior and other risk-facing situations. In particular, Adler recounts the conclusions of many practitioners and behavioral finance scholars who have studied such matters. This book is well worth reading, both for its practical advice for the novice and its wealth of illustrations for the pro.”

— Harry Markowitz, Nobel Laureate in Economics and father of modernportfolio theory

“David Adler has done a great public service by translating a dazzling array of research in economics and finance into practical terms that anyone can understand and profit from. This book should be required reading for every investor.”

— Andrew W. Lo, Professor of Finance, MIT Sloan School of Management

“Investing and managing your money on the basis of emotion, instincts, and intuition is a road straight to the poorhouse. This book teaches you why—and how to rid yourself of the irrational impulses that torment your portfolio.”

— Peter Navarro, bestselling author of If It’s Raining in Brazil, Buy Starbucks and The Coming China Wars

“Adler’s book makes a compelling case, illustrated through engaging examples, that the mind and the purse are well served by the triumph of analytic intelligence over intuition.”

— Gary Loveman, Chairman, President, & CEO, Harrah’s Entertainment, Inc.

Table of Contents

  1. Title Page
  2. Copyright Page
  3. Contents
  4. Acknowledgments
  5. About the Author
  6. Introduction: Second Thoughts About First Impressions
  7. Part I: The Psychology of Financial Decisions
    1. 1. Money Is a Drug
    2. 2. Buy High, Sell Low: The Basic Instinct Driven Error of Investing
    3. 3. More About Stocks: Dividends—Behavioral Ways to Play the Dividend Game
    4. 4. Bonds: Malign Neglect
    5. 5. The Psychology of Why People (Used to) Hate Annuities
    6. 6. The Psychology of Selecting Mutual Funds
    7. 7. Building Your Portfolio the Behavioral Economics Way
    8. 8. Risk Tolerance and Investing
    9. 9. Deconstructing Stock Analysts
    10. 10. Value Investing: Behavioral Origins
    11. 11. Timing Stocks
    12. 12. Momentum
    13. 13. The Ultimate Anomaly: Trusting Your Gut in Finance
  8. Part II: The Track, the Stock Market, and Other Types of Gambling
    1. 14. Let’s Talk about Linda: More About Our Intuition
    2. 15. Why Investors Bet on Long-Shot Horses
    3. 16. Gambling Continued: Stories We Tell Ourselves
    4. 17. Fourth and Ten: Insights into NFL (and Corporate) Decision Making
    5. 18. Football Stories, Continued: The NFL Draft
    6. 19. The Inner Game of Tennis, Revisited
    7. 20. How to Make Money Gambling: Behavioral Insights
    8. 21. The Truth About Coin Tosses: They Aren’t Fair
  9. Part III: Personal Decisions: Personal Safety, Personal Finance, and Health Choices
    1. 22. Personal Security: Assessing Danger
    2. 23. Credit Card Stories: Beating Your Credit Card Charges Using Behavioral Economics
    3. 24. Snap Judgment and Social Security: When Should You Claim It?
    4. 25. How Patients Think Irrationally
    5. 26. Health Insurance Decisions
    6. 27. Car Accidents
  10. Part IV. CEO Behavior
    1. 28. Strategic “Styles”
    2. 29. CEO Hubris
    3. 30. Firing CEOs
    4. 31. Using CEO Behavior for Investing
    5. 32. Wall Street CEOs
  11. Part V: Psychology and the Credit Crisis
    1. 33. Background: Bubbles and When They Explode
    2. 34. Fear and Loathing in Ft. Lauderdale
    3. 35. Follow the Mortgage
    4. 36. Risky Business: Bank Runs
    5. 37. Euphoria, Fear, and Economics: A Psychological Autopsy of the Crisis
  12. Part VI: Conclusion: Debiasing
    1. 38. How Not to Blink in the Face of Financial Panic
    2. 39. A Summing Up: Twilight of the Gods
  13. FT Press
  14. Index