The Art of Execution - Lee Freeman-Shor

[HubbadaPow]

I just finished another read of my favorite book on risk management.  The author allocated to many top hedge funds and analyzed all of their trades to look for insights.  He essentially found that poor managers freeze when a stock moves against them 20-35%, neither selling nor buying more at the lower price.  Winning managers simply do something.  Additionally, the poor managers cut winners after 20% gains while winning managers let them run to 70%+ profits.   It's important to remember that all of these managers are respected enough to earn an allocation from the author, but many of them commit seemingly obvious behavioral errors from time to time. 

 

Lots of brief case studies illustrate good and bad behavior.  They cover styles ranging across value, momentum, 20 year holding periods etc.  

Lessons for all kinds of investors in this quick read.  While there are doubtless many investing systems that work, the key lesson is that the system must align with the personality of the investor.  Whether he robotically cuts his losses, doubles down on bargains, or invests like a business owner for the long-haul, anything is better than turning rabbit and freezing at the critical moment.

[Mohammed Al Alwan]

its one of the best book i read on trade execution .this book improved my portfolio management by at least 30% .