The Investor's Paradox

We’re all familiar with "choice overload," whether on a trip to the grocery store, or while flipping through satellite TV channels. And while it’s human to want all of the options, the surprising truth is that the more choice we have, the less satisfied we are. And nowhere is this more true - or more dangerous - than in our investments. Despite the troubled global economy, there are tens of thousands of mutual funds, hedge funds, exchange-traded funds, and other vehicles waiting to take your money. For help, individual and institutional investors alike turn to financial managers, though they are often no better equipped than the average person to assess and manage risk. In The Investor’s Paradox, hedge fund expert Brian Portnoy explains how to sift through today’s diverse investment choices and solve even the most daunting portfolio problems. Drawing on cutting-edge research in behavioral economics, social psychology and choice theory, Portnoy lays bare the biases that interfere with good decision-making, and gives readers a set of basic tools they can use to tell the good from the bad. Along the way, he demystifies hedge funds, cuts through the labyrinth of the modern financial supermarket, and debunks popular myths, including the idea that mutual funds can "beat the market."

Preface: The Trillion Dollar Job No One Talks About
PART I. CONTEXTS 
1. Introduction: Picking Winners 
2. The Science (and Art) of Being Wrong
3. Alternative States
PART II. TOOLS
4. Managing Expectations 
5. Madoff's Hobgoblins
6. The Devil(s) You Know
7. Touring Lake Wobegon
PART III. EXTENSIONS
8. The Social Network
9. Gorillas in the Mist
10. Mirror, Mirror
11. Conclusion: More

Brian Portnoy, Ph.D., CFA, has been successfully researching, advising, and investing in hedge funds and mutual funds for the past fourteen years. He is currently the Head of Alternative Investments and Strategic Initiatives for Chicago Equity Partners, a $10 billion asset manager. Previously, Brian held senior roles at Mesirow Advanced Strategies and Morningstar, the world's premier research shop on mutual funds. He has spoken at numerous investing conferences across the U.S., Europe, and Asia, has appeared frequently on CNBC and CNN, and has been quoted in major publications, including the Wall Street Journal and the New York Times. Prior to his investing career, Brian pursued his research and teaching interests in political economy and markets at the University of Chicago, where he earned his Ph.D. in 2000. Brian is a CFA Charterholder and a member of the CFA Society of Chicago.

Timely: The scandals surrounding the finance community seem to be never-ending, and many experts predict the turbulence is far from over. Market understanding, and trust in money managers, is at an all-time low. Brian Portnoy also suggests that the endless array of investment options is undermining rather than improving portfolios. He shows readers how to manage choice, and recognize the many factors (besides "expert" advice) that create successful investments.

New application for behavioural economics: Behavioral economics is all the rage, with bestsellers like Dan Ariely's Predictably Irrational and Jonah Lehrer's How We Decide, and here Portnoy applies it to finding the right fund manager in a sea of confusing offers - or learning to manage your own portfolio effectively, sometimes by counterintuitive means.

Great author platform: Portnoy's credentials both as an academic and an investment professional make him ideal to write this book. He has had his research funded by the MacArthur Foundation and has appeared on CNN, CNBC, Bloomberg and MSNBC. He has been quoted in the Wall Street Journal and the New York Times. He has been advising hedge funds for the past ten years, and before that served as a senior analyst at Morningstar. He also holds a PhD from the University of Chicago and taught political economy there.

On the ground experience: Having interviewed about 5,000 money managers during his career and assembled winning portfolios of managers, Brian is a recognized expert. While at Morningstar, Brian authored research insights on numerous topics, including how to pick under‐the‐radar "hidden gem" investments and the virtues and constraints of index‐fund investing.