Hi all, I'm reading 2 books. 1. By David Dreman 2. By Joel Greenblatt Books were written in different times. However, both writers talk about 1 crucial thing that I did not know. The disadvantage of having superiority in fear vs inferioirty in happiness According to both, 90 per cent of the best of the brightest fund managers (Many of the Ivy League people) don't meet the average industry standard return on investments. This is over 10 year period. I was very surprised.  Here's the Chapter 9, that I'm going to type in (since Sajha won't allow copy/ paste or I don't know how to)..Hope this will be helpful. If you like it, I'll type more and hopefully some more people will be interested in "trying" to learn what I also am trying to learn. Figuring out where the value comes for a particular company and how to buy it as a reasonably cheap price..So, here I  go. CHAPTER 9 - The Big Secret for Small Investors I'll start from the 4th paragraph and come back to the first paragraph at the end of this writing Our survival instincts make us fear loss much more than we enjoy gain. Just like on the savannas in Africa, we run from danger first and ask questions later. No wonder we panic out of our investments when things look bleakest-we're just trying to survive! We have a herd mentality that makes us feel more comfortable staying with the pack. So buying high when everyone else is buying and selling low when everyone else is selling comes quite naturally- it just makes us feel better! We use our primitive instincts to make quick decisions based on limited data, and we weight most heavily what has just happened. Given the shortcuts that worked for us in the wild, of course we run from managers who performed poorly most recently and into the arms of last year's winners- (the Wall Street Players) - that just seems like the right thing to do! And I'm sure having a strong ego must have had some benefits over time, too, so as a result, we a think we're above average! That's probably why we consistently overestimate our ability to pick good stocks or to find above-average managers. It's aso this outsized ego that likely gives us the confidence to keep trading too much. And maybe that's why we keep making the investing mistakes over and over- we just figure this time we'll get it right! Understanding some of these things about ourselves is actually pretty powerful. It's from the understanding of our natural responses that we can begin to explain things like the most recent bubbles in housing and the Internet. To a large extent, maybe the value effect we examined in the last chapter (that's chapter 8)- is merely a result of the emotional overreactions that are built into all of us. Maybe it heps explain why Mr. Market acts crazy at times. But maybe it's also why we can't seem to take advantage of Mr. Market's craziness just when we should. Then again, none of this is really our fault! After all, we're busy surviving, herding, fixating on what just happened, and being overconfident! - Comments? So how do I propose we deal with these primitive emotions and lousy investing instincts? My answer is really quite simple: we don't! Let's just give up before we start! Let's just admit that we'll probably keep making the same investing mistakes no matter how many books on behavioral investing we read. Next time that lion comes charging toward us, let's just assume we're going to run!    So no what? Here's the plan. Let's take advantage of the fact that everyone else is human, too. Let's develop a strategy that helps keep us from making our mistakes. But at same time, let's assume that everybody else will keep making theirs! Maybe we can find some systmatic way to save us from ourselves by tying our hands behnd our backs ahead of time. But ideally, our plan should also leave us with enough rope to beat the market and almost all other investors! How are we going to do all that? We, we already have part of the solution. Clearly, we should start with a strategy that should outperform most others over time. As we've already learned, a market-cap-weighted index fun will likely outperform most active managers. Of course, over time, an equally weighted index fund or a fundamentally weighted index fund should do even better. But as we saw in the last chapter, a vaue-weighted index should do better still- and possibly by a lot! And if we choose the value-weighted  index fund, we'll actually be taking advantage of the systematic mistakes that most of us humans make, rather than suffering from them! Remember, the only reason the value strategy works is that we are systematically setting ourselves up to buy companies that most people don't want (Sony for example was very much hated until December of 2012 and suddenly everyone's excited). For many of the companies that value-weighted index favors, next year or the year after doesn't look so good. In general, our emotions tell us to shy away from these. On the other hand, everyone already knows the band news, and on average we don't have to pay a lot for our purchases. In fact, on average, people overreact and we get to own a portfolio filled with bargains! The important thing is that we do this systematicaly. By buying a diversified portfoio based on JUST THE NUMBERS, NOT THE EMOTIONS!  Will stop here for now..if you like it..will provide more! By the way, Greenblatt or Dreman- wiki them to find out who they are!