The Laws of Wealth: Psychology and the secret to investing success

by Daniel Crosby, Morgan Housel (Introduction)

Overview

From New York Times and USA Today bestselling author, Dr. Daniel Crosby—the behavioral finance book all investors have been waiting for.

In The Laws of Wealth, psychologist and behavioral finance expert Daniel Crosby presents three sets of real, actionable rules that investors can use to apply the lessons of behavioral finance.

He begins with ten rules that are the hallmarks of good investor behavior, including 'Forecasting is for Weathermen,' 'If You're Excited, It's Probably a Bad Idea,' and ‘Trouble is Opportunity.'

From here, attention turns to the Four Cs of Rule-Based Investing: Consistency, Clarity, Courageousness, Conviction. The Four Cs provide practical methods to combat behavioral risk in investing.

And finally, he introduces the Five Ps of successful equity investing: Price, Properties, Pitfalls, People, Push. Investors can draw on these five methods to select stocks and take advantage of behavioral opportunities in the stock market.

Throughout, anecdotes, research, and graphics illustrate the lessons in memorable ways. And in highly valuable 'What now?' summaries at the end of each chapter, Crosby provides clear, concise direction on what to think, ask, and do next to become a better investor.

If you are wondering what years of behavioral finance has delivered for real investors, you should follow the laws of wealth to manage your behavior and improve your investing!

Product Details

ISBN-13:	9780857197832
Publisher:	Harriman House
Publication date:	03/30/2021
Pages:	264
Sales rank:	196,617
Product dimensions:	5.50(w) x 8.50(h) x 0.90(d)

About the Author

Educated at Brigham Young and Emory Universities, Dr. Daniel Crosby is a psychologist, behavioral finance expert and asset manager who applies his study of market psychology to everything from financial product design to security selection. He is co-author of the New York Times bestseller Personal Benchmark: Integrating Behavioral Finance and Investment Management and founder of Nocturne Capital. He is at the forefront of behavioralising finance. His ideas have appeared in the Huffington Post and Risk Management Magazine, as well as his monthly columns for WealthManagement.com and Investment News.

Daniel was named one of the "12 Thinkers to Watch" by Monster.com, a "Financial Blogger You Should Be Reading" by AARP and in the "Top 40 Under 40" by Investment News.

When he is not consulting around market psychology, Daniel enjoys independent films, fanatically following St. Louis Cardinals baseball, and spending time with his wife and three children.

Table of Contents

Foreword Morgan Housel xiii

Preface or: How I Learned to Stop Worrying and Read this Book xv

Introduction: Of Worms & Wealth 1

Part 1 The Rules of Behavioral Self-Management 9

Paradox of Primates & Formalwear 11

Rule #1 You Control What Matters Most 22

Rule #2 You Cannot Do This Alone 27

Rule #3 Trouble Is Opportunity 34

Rule #4 If You're Excited, It's A Bad Idea 39

Rule #5 You Are Not Special 45

Rule #6 Your Life Is The Best Benchmark 50

Rule #7 Forecasting Is For Weathermen 59

Rule #8 Excess Is Never Permanent 67

Rule #9 Diversification Means Always Having To Say You're Sorry 74

Rule #10 Risk Is Not A Squiggly Line 81

Applying the Rules of Behavioral Self-Management 90

Part 2 Behavioral Investing 93

The State of Money Management 99

Managing Behavioral Risk 110

The Four Cs of Rule-Based Behavioral investing 122

The Five Ps of Investing 153

Epilogue. Behavioral Investing In A World Gone Mad 207

Bibliography 213

Endnotes 221

Index 233

Editorial Reviews

Drawing the connection that what makes us interesting as humans can make us unsuccessful at managing our money in times of turbulence, Dr. Crosby provides a safe haven with his framework for success. This book is not only informative but enjoyable, as he gently exposes how human behavior impacts our decision making. --Noreen D. Beaman, CEO of Brinker Capital, Inc

Should be read by all those new to investing. —Jim O'Shaughnessy, Author of What Works on Wall Street

Step away from CNBC and into financial therapy! People often think that buy low, sell high is the first (and only) rule of investing. This deceptively simple phrase motivates most, if not all investors, and yet many investors fail to successfully follow this simple mantra. In The Laws of Wealth, Daniel Crosby explains why we struggle with deceptively simple investment decisions, suggesting that first rule of profitable investing is to get out of your own way. --Meredith A. Jones, Author, Women of The Street: Why Female Money Managers Generate Higher Returns (And How You Can Too)

Individual investors are often their own worst enemies, whether they re selling when they should be buying, focusing on their stocks day-to-day swings or letting the media drive them into a panicked emotional state. In Dr. Daniel Crosby s newest book, he breaks down how to implement a set of easy-to-follow rules to keep investors on track. Don't let your mind ruin your investing outcomes. Read his book and arm yourself against yourself today. —LouAnn Lofton, The Motley Fool

When I'm looking for sharp, against-the-grain insights on how we can and should make better investing decisions, I always turn to Daniel Crosby. If he s publishing, blogging, or Tweeting, I want to know about it. It also doesn't hurt that he's often hilarious in taking our built-in foibles and creating the potential for ending up in a much better place than we would otherwise. This book is yet another fantastic contribution to the practice of sound (and sane) investing. —Dr. Brian Portnoy, Author of The Investor's Paradox, The Geometry of Wealth and How I Invest My Money

The financial services industry is broken and has for too long ignored the human factor. Savvy investors and advisors understand that emotions, decisions and behavior are at least as important as big returns and Dr. Daniel Crosby explains just that in The Laws of Wealth —David Geller, CEO, GV Financial

Dr. Daniel Crosby is one of the preeminent behavioral psychologists in investing today, and it shows with this tour de force of how an investor can manage their wealth. With these few simple rules, investors can easily build a framework allowing them to thrive, even when their human instincts try to sabotage their investing. Get this book! —Aaron Klein, CEO at Riskalyze

Using lively and engaging real-life examples Dr. Crosby gives insights into innate human behavior and its role within the financial markets. In this entertaining book he provides brilliant invaluable practical framework for investors, financial professionals and anyone in search of true wealth. —Dr. Svetlana Gherzi, Behavioral Finance Specialist, UBS

From the Publisher