The Anxious Investor: Mastering the Mental Game of Investing

Investors can make bad decisions “because of the behavioral biases we’re all subject to,” advises Nations (A History of the United States in Five Crashes), president of the financial engineering firm NationsShares, in this useful guide to avoiding common financial mistakes. The key theme is that “the social aspect of investing... hinders success.” To tackle the fear and irrationality that often accompany investing, he warns against a wealth of biases: there’s the status quo bias, or “the irrational tendency to prefer choices that maintain the status quo even when other choices would leave us better off,” which readers can counter by ensuring their portfolio is diversified; hindsight bias, which entails “fooling ourselves into thinking that we [saw] it coming because it is all so obvious now,” though investors should remember they can never truly know what’s coming; and overconfidence, which “may be the most dangerous.” Along the way, he encourages tamping down harmful tendencies by using long-term analysis, reminding readers that “just because it happened recently doesn’t mean it is normal.” Nations’s advice is grounded and practical, and the wealth of research backing it will leave readers feeling like they’re in good hands. New and seasoned investors alike will find this worth a look. Agent: David Fugate, LaunchBooks Literary. (Apr.)