My top ten investment psychology books

Posted by Stephen Sutherland on Tue, Sep 11, 2012 @ 12:59 PM

Investment psychology booksIn the first two posts of this series, we looked at some outstanding stock market investing books. Now we'll turn our attention to some investment psychology books that are also well worth adding to your reading list. I'll start with five of my top ten, with the another 5 to be reviewed in a post next week.

As always, I’ve provided a link to each book on Amazon should you wish to purchase it. If you do decide to buy, I will not be compensated in any way. Enjoy!

5 unmissable investment psychology books

1. Trading with Crowd Psychology (Wiley Trading) [Hardcover] – Carl Gyllenram

Because the state of the stock market is a reflection of the aggregate of investors’ choices, gaining insight into the complex dynamic of people’s behavior is essential to developing a successful trading plan. From the Dutch tulip mania, one of the oldest and most well-known financial bubbles, to numerous, highly illuminating real-world case studies, this fascinating book illustrates the behaviour of buyers and sellers under a range of conditions, from breakouts to breakdowns and, most important, in the context of the crowd, for that is where they are at their most predictable.

Gyllenram founded the Swedish Technical Analysts Federation in 1985 and is senior asset manager at S E B Enskilda Banken in Sweden–part of S E B, one of the largest asset managers in Scandinavia, and he manages both Swedish and European equity portfolios.

2. Mastering Trading Stress: Strategies for Maximizing Performance (Wiley Trading) [Hardcover] – Ari Kiev 

In ‘Mastering Trading Stress’, author Ari Kiev, a psychiatrist who specialises in stress management and works extensively with traders, offers examples, transcripts of conversations, and personality profiles of real-life traders to illustrate how stress affects their ability to perform at their best. Drawing on his vast experience, Kiev describes a variety of practical techniques that can be used to handle destructive emotions and out-of-control feelings, including his ‘Most Basic’ stress busters, and tells what to do if a breakdown should occur.

3. Stress Management for Dummies [Paperback] – Allen Elkin 

If you’ve never read a ‘Dummies’ book before, don’t let the title put you off. I have read many books in the ‘Dummies’ series and most of them have been excellent. In the majority of cases they pick authors who are known as ‘thought leaders’ in the topic discussed. Even though this book has not been written specifically for investors, there’s no denying that stress affects your investment performance and the consequences of not dealing with stress range from heavy stock market losses, poor health and broken marriages to premature death. Inside this easy to read book you discover how to lower your stress level using a variety of strategies, tools and techniques.

4 .Self-esteem: A Proven Program of Cognitive Techniques for Assessing, Improving and Maintaining Your Self-esteem [Paperback] – Matthew McKay & Patrick Fanning

More than 600,000 copies of this book have been sold. This is another book that's not written specifically for investors, however it’s an excellent choice and well worth reading. It’s straight forward and easy to follow. One thing I did like was discovering the importance of ‘not’ linking your net worth to your self-esteem and topics such as the nature of self-esteem, the pathological critic, disarming the critic and handling mistakes.

5. Feeling Good: The New Mood Therapy [Mass Market Paperback] – David D. Burns 

This is another book that takes a broad look at the subject, while still being very useful for investors. It’s fairly obvious that how good you feel about yourself and your life will affect in some way your investment performance. In ‘Feeling Good’, eminent psychiatrist, David D. Burns, M.D., outlines the remarkable, scientifically proven techniques that could lift your spirits and help you develop a positive outlook towards the markets, investing and life. After reading this book you’ll be armed to better recognise what causes your mood swings, nip negative feelings in the bud and handle hostility better.

In the next post in this blog series we’ll look at another five top investment psychology books. If you are fascinated by how psychology plays a part in your investing, you’ll probably like our articles about behavioural investing.

As always, if you have any questions or thoughts on these books, please leave a comment below or connect with us @ISACO_ on Twitter.

Please note past performance should not be used as a guide to future performance, which is not guaranteed. Investing in Funds should be considered a long-term investment. The value of the investment can go down as well as up and there is no guarantee that you will get back the amount you originally invested.

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Topics: Essential reading