The Investor’s Paradox

Publication Date: January 7, 2014

The Investor’s Paradox

Brian Portnoy

Publication Date: January 7, 2014

Investors are in a jam. A troubled global economy, unpredictable markets, and a bewildering number of investment choices create a dangerous landscape for individual and institutional investors alike. To meet this challenge, most of us rely on a portfolio of fund managers to take risk on our behalves. Here, investment expert Brian Portnoy delivers a powerful framework for choosing the right ones – and avoiding the losers.

Portnoy reveals that the right answers are found by confronting our own subconscious biases and behavioral quirks. A paradox we all face is the natural desire for more choice in our lives, yet the more we have, the less satisfied we become – whether we're at the grocery store, choosing doctors, or flipping through hundreds of TV channels. So, too, with investing, where there are literally tens of thousands of funds from which to choose. Hence "the investor's paradox": We crave abundant investment choices to conquer volatile markets, yet with greater flexibility, the more overwhelmed and less empowered we become.

Leveraging the fresh insights of behavioral economics, Portnoy demystifies the opaque world of elite hedge funds, addresses the limits of mass market mutual funds, and discards the false dichotomy between "traditional" and "alternative" investments. He also explores why hedge funds have recently become such a controversial and disruptive force. Turns out it's not the splashy headlines – spectacular trades, newly minted billionaires, aggressive tactics – but something much more fundamental. The stratospheric rise to prominence and availability of alternative strategies represents a further explosion in the size and complexity of the choice set in a market already saturated with products. It constitutes something we all both crave and detest.

The Investor's Paradox lights a path toward simplicity in a world of dangerous markets and overwhelming choice. Written in accessible, jargon-free language, with a healthy skepticism of today's money management industry, it offers not only practical tools for investment success but also a message of empowerment for investors drowning in possibility.

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ABOUT THE AUTHOR

Brian Portnoy, Ph.D., CFA, is an expert at simplifying the complex world of money. In his three books -- The Investor's Paradox, The Geometry of Wealth, and How I Invest My Money (edited with Josh Brown) -- he illustrates how to not only make better financial decisions but also figure out how money fits into a joyful life. Brian is the founder of Shaping Wealth, a financial wellness platform that works with individuals and organizations to make better money decisions. He has served as keynote speaker, seminar leader, and coach to thousands of investors on topics ranging from portfolio strategy to the connection between money and happiness. For more than two decades, Brian has worked in the hedge fund and mutual fund industries as portfolio manager and educator. He is a CFA Charterholder, earned his doctorate at the University of Chicago, and serves on the advisory board for the Alliance for Decision Education. He lives in Chicago with his wife and three children.