Book Cover

People in the financial industry are better at rationalizing than at being rational.

# Review

I picked this book up after listening to Zweig on Patrick O'Shaughnessy's podcast; I've always enjoyed reading Zweig's writing, whether it's his columns in the WSJ or his commentary on The Intelligent Investor. This book did not disappoint.

This book is a parody of Ambrose Bierce's The Devil's Dictionary, which in itself is a parody of a real dictionary. In this book, Zweig presents conventional investing wisdom in the form of dictionary definitions, which are as funny as they are informative. In the book Zweig touches on both market concepts as well as the psychology of investing, in particular mental biases and heuristic errors. Some of the key takeaways include:

1. Don't buy into hype; being cynical is prudent for investors. Wall Steet sells hope; it's important to be stoic and persevere during both ups and downs. "The way to a man’s heart may be through his stomach, but the way to pick an investor’s pocket is though his ear."

2. Asset allocation (deciding how much money to divide among different asset classes) is an often unappreciated aspect of investing and can be responsible for the majority of differences in results amongst investors.

3. Do not fool oneself and overestimate one's knowledge and expertise; remember both wins and losses and use a checklist when appropriate.

This book is targeted towards both professional and retail investors, offering advice and guidance beneficial to both. Many of the lessons hit very close to home, as I've witnessed first-hand retail investors get swept up in the sentiments of the market and make irrational moves, such as my mother buying TSE.BB at over $40 (currently trading ~$8). The Graham-Dodd value investors will appreciate this book, others, particularly brokers and advisors, may not find it so flattering.

# Conclusion

A hilarious book which distills conventional investing wisdom for the masses.

# Overall rating: 8.2

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