This week, we speak with James Montier, a member of GMO’s Asset Allocation team. Prior to joining GMO in 2009, he was co-head of Global Strategy at Société Générale. He is the author of several books including “Behavioural Investing: A Practitioner’s Guide to Applying Behavioural Finance”; “Behavioural Finance: Insights into Irrational Minds and Markets” and “The Little Book of Behavioural Investing.”
When he was hired, GMO’s Jeremy Grantham told him to “pound the table” when he believes “things get cheap” or an opportunity arises. “Emerging markets were looking really really cheap” and “Europe was looking pretty damned exciting as well” led to some table pounding last month during the sell off. “This was one of those examples were prices and fundamentals were getting dislocated.” He penned a piece on this, called, “Fear and the Psychology of Bear Markets.”
Montier enjoys solving puzzles, and believes the market is the biggest puzzle of all. We discuss the impact of fear on investing. Montier mentions a study of people with damage to their amygdala. This led these people to actually make better risk-based decisions, that were free from emotions and fear. He has been a student of behavioral finance, and tried to distill that wisdom into 7 Immutable Laws of Investing.
You can stream and download our full conversation, including the podcast extras, on Apple iTunes, Spotify, Overcast, Google, Bloomberg, and Stitcher. All of our earlier podcasts on your favorite pod hosts can be found here.
Next week, we speak with Christopher Whalen, an investment banker and former Federal Reserve researcher. He is the author of Inflated: How Money and Debt Built the American Dream, and Ford Men: From Inspiration to Enterprise.
James Montier Authored Books
Value Investing: Tools and Techniques for Intelligent Investment by James Montier
Behavioural Finance: Insights into Irrational Minds and Markets by James Montier
James Montier Favorite Books
The Intelligent Investor: A Book of Practical Counsel by Benjamin Graham
Taekwondo Biomechanics by Kang Sung Chul
Talking to the Dead by Harry Bingham