This week's letter is from one of my favorite analysts and behavioral finance thinkers, James Montier of Dresdner Kleinwort Wasserstein in London. James wrote a chapter for my new book, Just One Thing, and this article is very representative of the insightful work he puts out.
This report by James explores why it is that humans tend to believe something that is not true. What he finds is that the more distractions or noise, the more likely a person is to believe something that is false is true. By knowing where our weaknesses are we can program ourselves to be better investors and James will help you think "Outside the Box." (Footnotes are at the end of the article.)
John Mauldin, Editor
Outside the Box
Scepticism is rare, or, Descartes vs. Spinoza
Sometime ago a client asked us to compile a list of myths that the markets seemed to hold dear. We came up with twelve potential myths ranging from stocks for the long run to dividends don't matter via such topics as commodities for the future and bond supply matters. However, this exercise also made me wonder why it was that supposedly smart people ended…