Alchemy: The Surprising Power of Ideas That Don’t Make Sense
Rory Sutherland draws from his wonderful observation, knowledge in psychology, as well as an understanding of evolutionary theories to deliver a book pack full of deep insights and wisdom that explains why solving real-world problems psychologically can be cheaper and more effective than logical solutions.
Psychology is more than just a trick or magic, but a powerful way to solve problems that are often ignored in favor of rational, logical solutions. Sutherland provides many anecdotes, ideas and counterintuitive answers to why we brush our teeth, why bank branches have marble countertops, or how to reduce travel time without making the train go faster. These questions seem trivial but unveil deeper psychological reasons why things are the way they are.
The Laws of Human Nature
We aren’t aware of why we always behave in certain ways under certain conditions. Our thoughts and behavior are largely concealed from us, operating under the subconscious level. In this book, Robert Greene shows how understanding the laws of human nature will make you calmer, more observant, and less judgmental. You’ll learn how to avoid toxic dramas, alter negative thoughts and elevate yourself into a better being. I’ll be surprised if these traits don’t turn you into a better investor too.
Thinking, Fast and Slow
Written by a renowned psychologist and winner of Nobel Prize in Economics, Kahneman explores how our mind works and why we are the easiest person to fool. And again, a book that will help you avoid many cognitive biases and improve your decisions and judgments.
Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets
While The Drunkard’s Walk approach randomness through maths and science (Leonard Mlodinow is a mathematical physicist), Nassim Taleb looks at it from the eyes of a trader and philosopher. You’ll learn how randomness can fool us; why we’re not wired to think probabilistically; and why the things that didn’t happen, alternate histories, are just as important as what happened. You’ll also understand how news is like french fries; it keeps us satiated while slowly killing us from the inside (but we don’t see it). A required reading for those that say “If I had listened to you, I would have lost money”. This is the same group that believes everything you say when you tell them your past 10 predictions are correct. Fooled by Randomness is a hard book, but packed full of wisdom. Drawing examples from the stock market, medicine to philosophy and biology to explain what we think we know can be dangerous. It will change your perspective as an investor.
Psychology of Intelligence Analysis
In investing, we can be right for the wrong reason. Our return, or the outcome of an investment, is heavily influenced by the role of luck. Therefore, using it as the basis of judgment whether you have made the right decision can lead to wrong feedback and more mistakes down the road. A better way is to focus on the thought process – how you come to a conclusion by evaluating the logic and reasoning behind it. Drawing from studies in political, social sciences and clinical settings, this book looks into the psychological aspects of how we make decisions. The limitation of the mind, cognitive bias, and tools for better thinking. It then introduces a systematic framework to develop hypotheses, examines evidence and draws tentative conclusions. While most of the examples are associated with intelligence analysis in the political landscape, they are practical for any work concerning the analysis of information. If this is good enough to be the manual guide for CIA, it is certainly good enough for investors.
Blink
Why is that our gut feeling can be so accurate sometimes while leading us astray other times? Malcolm Gladwell explore the power of rapid recognition, how thin slice can help us make better decisions, and the dark side of putting too much blind faith in it. Intuition is not the opposite of deliberation, but the two sides of a coin. Good decision making comes from intuition is the result of training and following a set of rules.