A groundbreaking framework for improving portfolio performance that goes beyond traditional analytics, offering new ways to understand investment skills, process, and behaviors.
A groundbreaking framework for improving portfolio performance that goes beyond traditional analytics, offering new ways to understand investment skills, process, and behaviors.
Portfolio management is a tough business. Each day, managers face the challenges of an ever-changing and unforgiving market, where strategies and processes that worked yesterday may not work today, or tomorrow. The usual advice for improving portfolio performance-refining your strategy, staying within your style, doing better research, trading more efficiently-is important, but doesn't seem to affect outcomes sufficiently. This book, by an experienced advisor to institutional money managers, goes beyond conventional thinking to offer a new analytic framework that enables investors to improve their performance confidently, deliberately, and simply, by applying the principles of behavioral finance.
W. Edwards Deming observed that you can't improve what you don't measure. Active portfolio management lacks methods for measuring key inputs to management success like skills, process, and behavioral tendencies. Michael Ervolini offers a conceptually straightforward and well-tested framework that does just that, with evidence of how it helps managers enhance self-awareness and become better investors. In a series of short, accessible chapters, Ervolini investigates a range of topics from psychology and neuroscience, describing their relevance to the challenges of portfolio management. Finally, Ervolini offers seven ideas for improving. These range from maintaining an investment diary to performing rudimentary calculations that quantify basic skills; each idea, or ""project,"" helps managers gain a deeper understanding of their strengths and shortcomings and how to use this knowledge to improve investment performance.
By:
Michael A. Ervolini (Cabot Research LLC)
Foreword by:
Terrance Odean
Imprint: MIT Press
Country of Publication: United States
Dimensions:
Height: 229mm,
Width: 152mm,
Weight: 369g
ISBN: 9780262547901
ISBN 10: 0262547902
Pages: 304
Publication Date: 09 May 2023
Recommended Age: From 18 years
Audience:
Professional and scholarly
,
Undergraduate
Format: Paperback
Publisher's Status: Active
Foreword by Terrance Odean ix Preface xv Acknowledgments xvii Introduction xix Part One: Game Change 1 Industry Challenges 3 2 Why Johnny Can't Improve 19 3 New Analytic Framework 39 4 Process and Behaviors 51 5 Feedback in Action 67 6 Phantastic Risks 77 Part Two: Behavioral Matters 7 What Drives Selling? 87 8 Sell the Way You Buy--Strategically 91 9 Bearing Up in a Bear Market 95 10 Aching Conviction 99 11 Unconscious Deliberation 103 12 Investing in Self-Awareness 107 13 Stressing Performance 111 14 Thesis, Narrative, or Just Another Disappointing Story 115 15 Dreaming of Alpha 119 16 Motivated Reasoning 123 17 Regrettable Choices 127 18 Endowing Success 131 19 Counterfactual Investing 135 20 Great Investing Is Not Natural 139 21 Inside-Out Investing 143 22 Beware Phantastic Investments 147 23 Thanks for the Memories 153 24 Skills, Process, and Behaviors 157 25 Processing Success 161 26 Primed for Success 165 27 Fear, Anger, and Risk 171 28 Successful Choices 175 29 Changing for the Better 179 30 Portfolio Thinking 183 31 Promiscuous Thinking 187 32 Getting in the Flow 191 33 Believing is Seeing 195 34 A Storied Portfolio 201 35 The Trouble with Improving 207 36 Tired Investing 211 37 That Winning Feeling 215 38 Hold That Thought 219 39 Overcoming Overconfidence 223 40 The Power of Vulnerability 227 Part Three: Improving Right Away Project 1 Embracing the Scientific Method 233 Project 2 Maintaining a Diary 239 Project 3 Accounting for Skill 243 Project 4 Learning about Buying Skill 249 Project 5 Measuring Your Sell Effectiveness 253 Project 6 Calibrating Sizing 257 Project 7 Checklists 261 Epilogue 267 Glossary 271
Michael A. Ervolini is CEO of Cabot Research, a global software company that provides innovative analytics to money managers to help them improve portfolio performance.
