Think Like the Great Investors: Colin Nicholson

Colin Nicholson is a finance academic on the finance speakers’ circuit in Australia and this is not his first book on investment. In this book he looks at aspects of the psychology of investing.

The book is in three parts. The first part covers various mistakes in our thought processes which serve us well in our daily lives but make us terrible investors if we don’t find ways to overcome them. They are many and most of them apply to me. My worst fault is cognitive dissonance, but I also discovered mental accounting, which I also suffer from. I will write more about these in future articles.

The second part is a few essays on crowd thinking, which is helpful for understanding market booms. The third part is a collection of essays on investment psychology in general. I found these essays to be less interesting than the content in the first part of the book.

A useful feature is strategies to overcome the problems Nicholson raises at the end of each essay.
Overall, I think the book is worth reading, whether you are an Australian investor or not. I borrowed my copy from the public library and have taken notes from it, so I don’t need to buy it.