The Little Book of Behavioral Investing

Montier, a strategist who has worked at Dresdner Kleinwort, Societe Generale and GMO, condensed the behavioural finance literature into short chapters aimed at practitioners. Each chapter names a bias, cites the underlying experiment or market study, and proposes a change to investment process.

The biases covered include overoptimism, illusion of control, overconfidence in forecasts, confirmation bias, conservatism in updating, anchoring, the tendency to act under stress, herding, loss aversion and the sunk cost effect. Montier's practical recommendations follow a single principle: since biases cannot be reasoned away in the moment, investors should change their process in advance. He argues for pre-committed buy and sell criteria written when unemotional, for checklists, for reading company accounts before reading the story, for ignoring macroeconomic forecasts entirely, and for deliberately seeking evidence that contradicts an existing position.

His strongest empirical claims concern forecasting. He presents data showing that analyst earnings forecasts and economist growth forecasts have close to no predictive value, and that both groups adjust after events rather than before them.

The book repeats material from Montier's research notes and from Behavioural Investing, his longer academic-facing volume. It is thin on the question of whether knowing about a bias reduces it, and the replication problems that have hit parts of social psychology since 2011 touch some of the studies he cites, though the finance-specific findings on forecasting and overconfidence have held up better.