Thursday, January 18, 2018

Book #1 - The Undoing Project - Michael Lewis


One of my goals for 2018 is to read at least one book per month.  I will definitely be reading some investing books as well, but the first one I picked for the new year was The Undoing Project by Michael Lewis.

Why did I pick this book?
Michael Lewis is easily one of the most popular and easy to read authors of our time.  Having read and watched both Moneyball and The Big Short and loving every minute of it, there was no way I wasn't going to read this book!

What is it about?
The book follows two psychologists Daniel Kahneman and Amos Tversky who couldn't be more different, but somehow create a bond unlike any other.  They study human decision making and all of the errors we making when we want to make a decision not only based on numbers but also a story or by following our "gut."  The further explored decisions based on risk and reward and all of the various outcomes that could arise due to inherent biases which we may not be aware of.  Their work together resulted in Daniel Kahneman winning the Nobel Prize in Economics.  Who knew how this book could be to investing?!  It is quite interesting, in my opinion, to study behavioral psychology especially since it DOES relate to investing behavior.  How many times have we bought shares of a company because of what we thought was going to happen and how great of a history a company has had.  It has to recover right?  Are we really taking a close look at the financial statements the company has put out and following the trend to determine if a company is a good bet or not?  We can easily frame our decision in a way that makes it seem more favorable without even knowing it!

My rating:
I give the book a 3/5.  The intro to the book discussing sports and the Houston Rockets had me hooked and I had set my expectations at Moneyball and The Big Short level, but I was a little let down.  This is partially due to the fact that two topics I am very passionate about include sports and markets, while this was on psychology.  I do enjoy learning about psychology but the mix of that and biography did not sit well with me.  It was nowhere close to my favorite books written by Michael Lewis.  Don't get me wrong, it's a well written book on an intriguing topic (behavioral economics) packed with some interesting scenarios and unlikely life stories, but most of the book had me yearning for more and a little bit bored.

Favorite quotes from the book?
  • “Confirmation bias,” he’d heard this called. The human mind was just bad at seeing things it did not expect to see, and a bit too eager to see what it expected to see. “Confirmation bias is the most insidious because you don’t even realize it is happening,” he said"
  • “It is sometimes easier to make the world a better place than to prove you have made the world a better place.” 
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