The Investor’s Quotient is a welcome breath of fresh air in whathas been a too-long-avoided subject-the psychological reasons why some people win and most others lose in the commodity markets. More than that, Jake Bernstein proves in this book he is an excellent teacher, and clearly and candidly shows how greater knowledge of yourself can become your most effective trading tool. It’s a must for every trader’s library.
Author’s Note:
I will, at the outset, make a few seemingly immodest but totally honest assumptions, and I will give you some guarantees. The regulations that are imposed on me by our “wise” professional and bureaucratic agencies prohibit me from guaranteeing you monetary profits. And while the disinflationary years since 1980 have brought with them the usual trend toward increased conservatism and erosion of personal freedoms, I am still not prohibited from giving you other guarantees. I will exercise these rights while I still have them. Here are a few things that reading, studying, and applying this book will do for you:
- 1. Your losses should decrease and your profits should increase. At first you will notice that you are losing less on your bad trades and making more on your profitable trades.
- 2. Eventually you will be trading and/or investing profitably. Yes, there will still be losses. They are a necessary part of the game. There can be no profits without losses, but the losses may be minimized, and that’s the name of the game.
- 3. Your attitudes about yourself will be considerably more positive. You will take pride in your skills and you will apply your selfknowledge toward positive ends, both in the markets and in your personal life.
- 4. Your self-confidence will increase. You will listen to and follow your own good work rather than relying upon the advice of others whether they be considered experts or not.
- 5. You will become more consistent, more organized, and more thorough in applying your market knowledge. In doing so, you will achieve positive results even if you fail at first. Through failure, you can discover what’s working for you and what’s not.
- 6. You will search for and find trading systems and methods which best suit your temperament, finances, and personality.
- 7. You will not take your market work too seriously, however, you will not assign it an inferior position. In other words, you will strike the correct balance of market studies vs. personal and family activities. You will not be a slave to the market, rather you will become one of its masters. You will do so not by actually mastering the market, but rather by mastering yourself.
- 8. You will make fewer errors either of poor judgment, subversion, or perversion of your own trading rules. You will recognize your potential errors early in their development, and you will squelch them before they take their toll, both in emotions and in profits.
- 9. You will understand more clearly the relationship between news, fundamentals, other traders, yourself, and the market. You will know your place most of the time.
- 10. While you will still err on occasion, you will do so less frequently and you will rarely repeat the same blunders.
- 11. You will be less concerned with the success of others than with your own success. Your competition will be your own performance.
- 12. You will have conquered the need to trade for the sake of the game. In other words, you will trade only when the opportunity for profit is clear.
- 13. Finally, you will determine your position as a trader whether long-term, short-term, intermediate term or otherwise.
The changes and benefits I’ve just mentioned, may prove to be just the tip of the iceberg. There are many additional benefits that may result from the synergism stimulated in turn by your studies and self-analysis. I cannot give you any guarantees of success. I can, however, guarantee that if you are successful in changing your personal psychology; your relationship with yourself and those around you and your perception and relationship with the markets, you will thus become more successful than you ever dreamed possible.
Contents:
- My Story
- Many Markets—Many Similarities
- Psychology and the Markets: Similarities and Differences
- Psychoanalytic Theory—Do Childhood Experiences Affect Behavior?
- Learning Theory: Is All Learning Stimulus-Response?
- The Response Sector
- The Consequences of Behavior
- The Discovery Process—How to Know Yourself
- How to Rectify Trading Errors
- Further Details on Dealing with Trading Problems
- Scheduling and Self-Discipline
- The Importance of Trading with the Trend
- The Role of Advisory Services
- Is This You?
- Can a Positive Mental Attitude Facilitate Consistent Success?
- The Broker-Client Relationship
- Putting It All Together—Where You Fit
- Social Psychology and the Markets
- Some Psychological Trading Rules
- The Perceptual Factor
- Subliminal Perception—Response without Awareness
- Minimize Stress—Maximize Health and Profits
- Often-Asked Questions
- Sex and the Markets: Fact or Fantasy
- Using Psychology to Maximize Investment Success
- Writings of the Masters: Study History to Learn about the Future
- Creative Visualization and Guided Imagery
- Overcome Your Worst Fears: How Psychology Facilitates Success
- Why Too Many Traders and Investors Lose
- Modeling the Behavior of Successful Traders
- Facing the Challenges of Today’s and Tomorrow’s Markets
- Some Closing Thoughts: Facing the Challenges of Today and Tomorrow
The Investor's Quotient: The Psychology of Successful Investing in Commodities & Stocks By Jake Bernstein pdf
Mauricio Wheeler (verified owner) –
Great Book on Psychology
Theo Stevenson (verified owner) –
I don’t know if I had a great expectation, but I found the book weak. The spoken psychology part is interesting, but being addressed first seemed like an introduction that I was hoping to have some return that never occurred. The other chapters he gives a brush stroke on various subjects, some I found it very short because he wanted more and many others that I saw no meaning for the purpose of the book. The book overall is a good introduction to psychology in negotiations. The bibliography is another point that was excellent for me. Including the part of the annex with a brief introduction to other teachers.
Cristian Haley (verified owner) –
An good book which tells that it’s the trader’s mind which makes him success or failure
Sydney Stevenson (verified owner) –
As a psych major I enjoy this book. Some say there are better however in my professional opinion this is worth the buy.
Richard Rowe (verified owner) –
Brilliant book. Only for people who are interested in psychology and who believe that its the individual performance at work and not the trading system which is behind the success of any good trader.
Remington Sierra (verified owner) –
It is a great product and helped tremendously in combination with baking soda to alleviate my acid indigestion.
The product arrived promptly and in perfect condition.
I would recommend it to others even though it tastes disgusting, just because it is so beneficial to the digestion process when used morning and eening.
Addilynn Cruz (verified owner) –
I have been investing for a good number of years. I think I have made more money for the firms I have invested with than for myself. Recently I realized that I might make some more money by investing directly in stock myself. For the last six months I have been on an interesting learning curve. That curve led me to “The Investor’s Quotient”. Although published in 1993 the book is still current.
I have long been a student of psychology. I long ago realized that the mind is a powerful tool.
An analogy I like to use is the following. As I was learning the game of golf I realized that there are certain mechanical steps to the game, the way to hold the club, where to place the ball, what ball to use etc. but the biggest hurdle is understanding yourself, being positive and controlling your emotions. Jack Nicklaus once said that the game is played between the ears. You cannot deny he has been successful. This book has provided the same type of thinking and applied it to stocks. Your emotions can make or break your financial success. This book helps in setting your mind in a positive mode.
There are many, many books on the general premise that you can invest in stocks. There are significantly fewer providing step by step methods on how to invest in stocks. There is an extreme shortage of good books that help you understand what you have to go through to succeed in the stock market and provide a powerful mindset going forward. I believe that this book is one of those few.
I recommend it.
Amira Boone (verified owner) –
Very poor book. Too many general stuff. Too many Freud and so little real advices. Completly useless. If you need serious psychology help for your trading, buy Mark Douglas and don’t spent money on Bernstein.
Ryan Carroll (verified owner) –
This a great book that delves into the psyche of every trader and makes them figure out their underlying reasons for why they trade.
Mr.Bernstein makes a trader put himself under a microscope and forces him to interact with markets in a way that fits his personality.
Mr.Bernstein also shows traders how to change their personalities to match the markets they are trading, whether it’s stocks or Commodities.
Matilda Aguirre (verified owner) –
Believe it or not, I despised the book much just because of its title, deeming it as one of the many thousands of whatever Q books common marketers try to sell. I simply bought it for its so “affordable” price. The fact is: I had been absolutely wrong. The author, a psychologist, really put something solid behind his propositions and recommendations. There are many books about why tips kill. The author really went into the very depth of our minds in layman psychology terms to explore why we kept on doing stupid things. As a pseudo intellect (ha ha), I bought his concept and that’s the very beginning of my new professional trading life (avoiding any form of tipsters and tips). For those who are suffering from obsessive compulsive disorder on “tips”, it might help you a lot to stop your tips induced losing streak!
Callan Burke (verified owner) –
if you are allowed to buy only one book that deals with the psychology of trading. this will be it. what is excellent about this book is it gives you an idea on how to improve yourself using psychology.
in the first few chapters of this book, mr bernstein links the science of psychology to the ‘science’ of investing. exploring the various branch of psychology, then comparing psychology to our trading behaviour to show how it is linked.
after that, mr bernstein goes on to tell you the many ways in which we can use what is learned in the science of psychology to improve, correct and/or enchance our trading. 200 odd pages of relevant materials and wise words on how you can go about doing it.
the author is a very good and methodical teacher. bringing out each aspect of our trading, showing us how we can look for weaknesses and improve. ie he talks about our personal beliefs, how our childhood can affect our trading style, our relationship with broker/spouse/family, our methods, or even certain specific probelms like not able to cut losses etc. analysing each aspect, allowing us to understand how it can affect our trading, and then show us how we can correct/improve. he even teaches the reader how best to read books!
after reading this book, you should learn much about yourself and the kind of trader you are. you will also learn the best way to help yourself, to improve on any weaknesses.
if there is a degree on trading, this is the definitely one of the main texts. i will also confess that my trading has improved tremendously since reading this book, from annual loser to annual winner.
this book is highly recommended. it will also stand the test of time, i strongly believe it will still be as relevant 300 years from now!
Marceline Byrd (verified owner) –
Wow–I am truly impressed with the quality and content of this book! Fortunately, the short profile quiz in the book identified me as a trader who already has strong self-discipline and a good working understanding of trading psychology and as someone who might not need to read further chapters, but I was still able to pick up pointers and solutions to the remaining problems that plague me (getting out of a position too soon, or getting out too late–both problems falling in a class called “non-specific fear or greed”). Friends of mine who have weaker self-discipline clearly exhibit many of the psychological problems that Bernstein describes as common amongst traders, especially a strong aversion to using stops for money management/loss control. I find many of his repair techniques to be similar to those used in neuro-linguistic programming (NLP) to treat other behavioral/psychological problems, and I appreciate his respect for many different trading styles and systems; unlike many other writers, who say that their system is the ONLY system or ONLY way to consistently profit, Bernstein stresses that ANY trading system/methodology or lack thereof will work so long as the trader has the psychology and discipline to execute it. Bernstein of course advances his own trading rules, some of which I don’t agree with but which are not wrong–just not my style. Whatever *your* trading style, I’m sure you’ll benefit from learning how to better implement it, so read this book! Needless to say, this is one of the few books that I’ve decided shall have a permanent place on my trading library shelf. It is at once detailed and scientific in content, yet easy to read and understand and will be re-read in times of trading weakness.
Nataly Willis (verified owner) –
The Investor’s Quotient, its first edition (1980) written long before the days of Daniel Kahneman winning the Nobel Prize, is at its core about how to master yourself as a means to the endgame of mastering the market. This classic read was way ahead of its time and ages well due to Jake Bernstein’s background as a clinical psychologist and trader.
There are only a few aspects of the book that deem critique: Too often the book strays into the realms of modern-day, glossy “help-thyself” magazines, with tables such as “Positive Things After A Profitable Trade”, with advice #5: “Buy something! Now is the time to get that new car or tape player”. This tendency, as well as the somewhat lengthy historical sweep of modern psychology brings the overall grade down a notch. However, most books are written with an actual target audience in mind and the book aimed at the budding masses of private investors that slowly started trading again after the horrific decades in the 1960’s and 1970’s. Nowadays, that target audience has dwindled as the savings pool has shifted into the hands of institutions. But the core message is no less relevant: Past behaviour is a certain indicator of future behaviour.
So, how do you gain a successful investing/trading behaviour? Well, Bernstein says there are basically two ways: either through being extremely fortunate or by sheer discipline. But discipline is more than just a set of rules and it makes no sense if you are following a rule that is not consistent with investment success. Instead, discipline means self-control, consistency, organization, persistence and ability to take action – all attributes that will hike the odds of profitable trading. The overarching objective of the book is, again, to master yourself by a) knowing yourself well enough to know what works best in your hands and b) putting discipline into the very DNA of your market activity.
Market participants of today would surely look back at the line “derived from personal experience in trading the most volatile and demanding markets in history” (referring to the 80’s), with a slight “if-only-he’d-known”-smirk. But that is the very thing about investing: Today’s future is always the hardest future of them all. Hence, the book’s most important part might be the trading-implications from B.F. Skinner’s “learning theory”. Say you invest in stocks based on two rules: ROE must be more than 15% and PBV must be below 1. One day Stock A meets your criteria, but then you happen to talk to your neighbour who says: “I heard bad things about the CEO, I’d stay away”. You take his advice and skip the trade, the stock goes down and you feel good about the whole thing. But this avoidance of a loss will without any shred of doubt lead to “faulty behaviour” and you will be in trouble in the long run.
Because of peoples’ constant thirst for (positive) reinforcement, a “faulty” trade resulting in a lucky profit is much more likely to be remembered and acted upon again, as opposed to a “correct” decision leading to a loss. James Montier many years later coined the “process over performance” thinking. Faulty learning then leads to more faulty learning until the road to success is permanently obscured.
This is all fine but in today’s harsh reality of daily NAVs, tracking errors, nervous clients and trigger-happy bosses, how can you possibly abide by this? Isn’t behavioural finance such a powerful force in modern portfolio management just because so many are trapped within “the institutional barriers”? Certainly, but remember that they are all excuses, not reasons for not investing in a manner where the odds are in your favour. Ultimately, the only person who decides whether you ought to follow your inner convictions and beliefs all the way is you.
Deborah Palmer (verified owner) –
Some important ideas in here. Worth buying and reading.
Vera Benjamin (verified owner) –
Save your money. Never, never waste your funds on the drivel this author produces!!
A profitable trader would never have time enough to write even one tenth the quantity of words this person produces.
Find traders that actually make money to learn from. There are a few that have written good books.
As starting points for trading:
For equities traders try: Professional Stock Trading
For futures traders try: Trading Day by Day
For psychology of investing try: Trading in the Zone
These are simply starting points, but are written by REAL traders (Mark Douglas excluded), not worthless-book producers.
Regina Rubio (verified owner) –
Jake is honest and blunt like you would expect from a good therapist. I especially liked the blend of theory and application when discussing trading problems. This book has essential information that is approached in an interesting way.
Jaden Price (verified owner) –
This is the book you have been looking for. Stop looking.
Zander Welch (verified owner) –
Great book. Jake Bernstein certainly knows the psychology of trading!
Titan Booker (verified owner) –
The Investor’s Quotient goes into great detail about the psychology of investing and suggest the various ways you can become mentally strong to withstand the ups and downs in the market and become a successful investor.
Zara Bradley (verified owner) –
Review for The Investor’s Quotient: The Psychology of Successful Investing in Commodities & Stocks
★ ★ ★ ★ ★