The Sceptical Investor
How contrarians bet against the market and win - and you can too
By John Stepek
|Paperback||£14.99 / $19.99|
|eBook||£9.99 / $9.99|
The Sceptical Investor
How contrarians bet against the market and win - and you can too
By John Stepek
Everyone wants to be a contrarian investor.
From the hedge funds who bet against the US housing market in the run up to 2008, to George Soros’s billion-dollar bet against the Bank of England in 1992, some of the most famous and most profitable trades in history have been contrarian calls.
And with the relentless growth of passive investing – investors blindly following the market – the opportunities for a smart investor to profit by betting against the crowd should be greater than ever.
Yet being a contrarian is hard work.
It takes patience, the conviction to stand by an unpopular viewpoint, and the mental toughness to endure being ‘wrong’ for prolonged periods of time. Standing out from the crowd goes against our every natural instinct.
Which is, of course, why it works.
So how do you go about it? There is no single, mechanical investment approach that marks an investor out as a contrarian. Instead, you need to adopt a sceptical mindset: a flexible mode of thinking that allows you to stand back and spot when the market’s view of the world is badly out of touch with reality – and the best way to profit when reality eventually reasserts itself.
In The Sceptical Investor, John Stepek, executive editor of MoneyWeek, pulls together the latest research on behavioural finance, and examples from well-known contrarian investors, to offer practical techniques to help you to spot opportunities in common investment situations, from turnaround plays to bubbles and busts, that others in the market miss.
It won’t make you popular and it won’t make you famous. But it will make you money.
About the author
John Stepek has been writing about business, economics and investment for more than 20 years.
He is the executive editor of MoneyWeek, Britain’s bestselling weekly investment magazine. Since 2005, he has been the main author on its investment newsletter, Money Morning, which goes out by email to more than 85,000 readers each day. MoneyWeek is well-known for its contrarian investment views - most notably for warning repeatedly, well before the fall of Northern Rock or Lehman Brothers, that the collapse in US house prices in 2006 would mutate into a much more damaging financial crisis.
Before he became a journalist, Stepek worked for his family's business, a chain of electrical retail shops in the east end of Glasgow, but then decided that he would rather write for a living. He started out by writing articles about the specific business challenges facing family firms and now writes about all aspects of financial markets, from bonds to gold to derivatives. He studied psychology at university and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
His work has been published in The Spectator and The Sunday Times as well as a wide range of specialist financial magazines. He has appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. You can follow him on Twitter at @John_Stepek.
I’ve read John Stepek’s work for over a decade now and have come to learn that when I see his byline, I know what follows will have been well considered and researched and thoughtfully communicated in an effort to genuinely help the reader become a better investor. The Sceptical Investor is case in point. If you’re new to investing, the book provides an excellent overview of how you should mentally and emotionally approach investing. It’s not just about running numbers on a spreadsheet or going against the grain. John smartly identifies the flaws in pure ‘contrarian’ investing and instead offers a more balanced and nuanced ‘sceptial’ mindset that will better serve investors over time. Learning that pure contrarianism doesn’t work can take a new investor years and many losses to figure out. John’s book will help you minimize your time on that troublesome path. If you’re an experienced investor, John’s book offers both fresh ideas around how to structure your process and serves as a reminder for the correct frameworks for approaching investing. Most investing books designed for individual investors are either too basic to be valuable to experienced investors or too advanced and scare off new investors. John has a knack for writing in a way that serves both groups. The Sceptical Investor is written in plan language, yet that does not come at the cost of insightful and useful commentary. This is the sign of a first rate investment thinker and John fits that mold indeed.
John is one of Britain’s foremost financial writers and in this entertaining book he wants you to know why an understanding of human behaviour is an important part of any investment process. Knowing when to resist the siren voice of the crowd is one of the great challenges of investing. The book is packed with information about why the most comfortable investments are rarely the most profitable.
“John has been writing about investing, and meeting with the key characters in the investment world, for over 15 years. You’ll want to read what he has to say very carefully – and make sure that anyone managing your money reads it too.”
“Packed with practical behavioural advice … I recommend it without reservation.”
This morning, we’ve got another extract from The Sceptical Investor for you. I published the book with Harriman House last year. It’s all about contrarian investing – or as I’ve rebranded it, sceptical investing.
As the title suggests, The Sceptical Investor: How Contrarians Bet Against the Market and Win – and You Can Too (Harriman House, £14.99), by our executive editor, John Stepek, is about the importance of standing aside from the herd. Adopting a contrarian mindset will help you avoid being sucked into market bubbles and enable you… Read more »
From What Investment :
John Stepek is the executive editor of Money Week magazine and anyone who subscribes to the magazine or its daily email alerts will be familiar with his style and views. He is what one might call a healthy sceptic, rather than a cynical one; which is what makes this book so readable and useful. His… Read more »
From The American Asociation of Individual Investors:
There are two key traits that every contrarian needs: skepticism and patience. Here’s what to consider before you rush to invest in companies that have fallen from grace…. John Stepek is the executive editor of Britain’s MoneyWeek investment magazine and author of “The Sceptical Investor” (Harriman House, 2019).
From Money & Media:
The next time I’m asked for book recommendations, I’ll happily add a third volume to the list, namely, John Stepek’s ‘The Sceptical Investor’ which was only published a few months ago. Given the current brouhaha over Neil Woodford and his eponymous equity income fund, the name of this title alone is worth the book’s the… Read more »
From Think Trading:
Most books on investing have a positive title, like “How to win at investing” or something similar, but Stepek has chosen as a main title one that is fitting to his cautious and thoughtful approach (the subtitle does a better job of whetting the reader’s appetite) . The Sceptial Investor proffers to be about contrarian… Read more »
From The Motley Fool:
Stock-picking requires time and a willingness to thoroughly research companies before buying them. Even Warren Buffett — generally regarded as the best stock-picker that’s ever lived — believes the vast majority of us shouldn’t be active investors. Those who enjoy the challenge, however, should read on. The big question Reading through MoneyWeek executive editor John… Read more »
From Informed Choice Radio:
It seems that all investors want to be contrarian investors. My guest today explains that being a contrarian is hard work. It requires a lot of patience, both in terms of waiting for opportunities and then waiting to be proven right. And it requires us to go against basic human instincts, fighting our natural tendencies… Read more »
From Seeking Alpha:
John Stepek, executive editor of the UK’s best-selling financial magazine MoneyWeek, has written an astute book for retail investors. The Sceptical Investor: How Contrarians Bet Against the Market and Win – And You Can Too (Harriman House, 2019) suggests that the investor start with the admittedly incorrect premise that the financial markets are always wrong… Read more »
From Master Investor:
Richard Gill, CFA, reviews The Sceptical Investor, a “comprehensive manifesto” for contrarian investing, written by MoneyWeek executive editor John Stepek.
From The Vox Markets Podcast:
John Stepek, Executive Editor of Moneyweek Magazine and author Sceptical Investor – How contrarians bet against the market and win – and you can too. (Interview starts at 32 minutes 56 seconds)
From Buillon Vault:
Snipped from The Sceptical Investor… My BOOK, The Sceptical Investor, is now out, writes John Stepek, executive editor of MoneyWeek, in his free daily investment email Money Morning. It’s all about contrarian investing. Or as I’ve slightly cheekily rebranded it, sceptical investing. The book is aimed at all levels of investor. Beginners should find it… Read more »
From MarketWrap with Moe Ansari:
Nationwide radio show. Moe begins each Market Wrap broadcast with an analysis of the day’s news from Wall Street and around the world, along with their implications for the financial markets. Daily, he summarizes the markets’ activity —what happened and why— with detailed technical and fundamental analysis. Guest experts then join Moe for an informative… Read more »
From State of the Markets Podcast:
#51 Contrarian Investing – The most consistent investment strategy among the greats with John Stepek of MoneyWeek.com State of the Markets Podcast.
Chapter 1. What is Contrarian Investing?
Chapter 2. Why Sceptical Investing Works
Chapter 3. Why Should I be a Sceptical Investor?
Chapter 4. Your Big Advantage Over the Professionals
Chapter 5. You Versus the Crowd
Chapter 6. Beating Your Brain - Process Versus Outcome
Chapter 7. How to Use the Media
Chapter 8. The Incredible Power of Incentives
Chapter 9. The Importance of Intellectual Humility
Chapter 10. How to Spot Bubbles and What to Do About Them
Chapter 11. Finding the World's Cheapest Markets
Chapter 12. The Dangerous Temptation of Making Better Forecasts
Chapter 13. Buying Companies for Less Than They're Worth
Chapter 14. Turnaround Situations, Falling Knives and Profit Warnings
Chapter 15. Finding a Contrarian Fund Manager
|Formats:||paperback - ISBN 9780857196279
ebook - ISBN 9780857196286
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