Blue Ridge Capital's Behavioral Finance Recommended Reading List ~ market folly

Thursday, May 21, 2009

Blue Ridge Capital's Behavioral Finance Recommended Reading List

This is the fourth and final installment of hedge fund Blue Ridge Capital's recommended reading list. Previously, we've revealed Blue Ridge's recommended Analytical Reading List, their Historical/Biographical List, and their Economics List. This week, we'll turn to their recommended Behavioral Finance reads.

Long-time blog readers will know that we track Blue Ridge because they are the pure definition of a 'Tiger Cub'.   John Griffin was Julian Robertson's right-hand man while at Tiger Management before founding Blue Ridge.

Behavioral Finance

Investment Psychology Explained: Classic Strategies to Beat the Market by Martin Pring: A 'back to basics' book on how to beat the market.

Beyond Greed and Fear by Hersh Shefrin: A look at how bias, perception, and psychology run the stock market. 

The Money Game by Adam Smith: Book hypothesizing that the stock market is just a game; explains technical analysis, fundamental analysis, psychology, and more. 

Influence: The Psychology of Persuasion by Robert Cialdini: Understanding the foundation of persuasion and marketing.

The Inefficient Stock Market by Robert Haugen: 'What works and why.' This book looks at how the market is inefficient and argues that financial models based on economic behavior cannot explain certain aspects of (often irrational) market behavior.

Why Smart People Make Big Money Mistakes by Gilovich & Belsky: Close examination of the psychological reasons behind how and why people invest, spend, and save.

The Psychology and Judgment of Decision Making by Scott Plous: Examination of your own psychology of decision making.

How We Know What Isn't So by Thomas Gilovich: Focuses on errors humans make when forming opinions and trying to comprehend things.

Decision Traps: 10 Barriers to Brilliant Decision Making by J. Russo: Training to become a good decision-maker (one of the most important business skills out there). 

Extraordinary Popular Delusions and the Madness of Crowds by Tobias & McKay: A book discussing "the herd mentality" at its finest, where the masses collectively assemble and follow each other like lemmings.

Hare Brain, Tortoise Mind by Guy Claxton: How to handle complex situations by way of perception, problem solving, and creativity. 

The Moral Animal: Why We Are the Way We Are by Robert Wright: Evolutionary psychology and human nature.

That finishes up the Behavioral Finance category and also concludes Blue Ridge's recommendations. If you've missed some of our past lists, here is our archived compendium.

Recommended Reading Lists

- Blue Ridge Capital's Recommended Analytical Reading

- Blue Ridge's Recommended Historical/Biographical Reading

- Blue Ridge Capital's Recommended Economics Reading

- Fundamentals

- Technical analysis

- Good Market Reads

- Gurus

- John Burbank's hedge fund Passport Capital: Suggested Reading List

Background on Blue Ridge:

Griffin is a Tiger Cub, and as mentioned above, he was Julian Robertson's right hand man. So, needless to say, he knows his stuff. Blue Ridge seeks absolute returns by investing in companies who dominate their industries and shorting the companies who have fundamental problems. While hedge funds typically closely guard their short positions, we've gotten a sneak peek in the past at what Blue Ridge had been shorting. Both Griffin at Blue Ridge and Lee Ainslie over at Maverick Capital like to effectively hedge with a solid balance of both long and short positions (like a true hedge fund... not like some of the crazy funds these days that aren't truly hedged). Griffin attended the University of Virginia for undergrad and received his MBA from Stanford.

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