Seven Sins of Fund Managers

An interesting paper by value investor James Montier titled 'Seven Sins of Fund Managers'

The 'deadly' sins are 

1. Forecasting
2. The illusion of knowledge
3. Meeting companies
4. Thinking you can outsmart everyone else
5. Short term horizons and overtrading
6. Believing everything you read
7. Group based decisions

I am still reading this paper so will write a bit more in the future but suffice to say these sins are not just committed by fund managers, I think we all have done a few of these (and more!).


Next time your read a stock analysis (or do one yourself) double check how much forecasting is involved. The greater the extent of forecasting and predicting the future e.g. sales, earnings growth,  the more likely you are paying for those expectations. Hence, the greater the risk and dare I say it 'speculation' in the purchase!

Anyhow, being aware of these pitfalls may help you improve your investing decisions.