In Chapter 13, we meet the Dealers. Larry Harris compares them to any other merchant—like a car dealer or a grocer. They buy inventory at a low price (the Bid) and sell it at a high price (the Ask). Their product isn’t the stock itself; it’s Immediacy. They are selling you the ability to trade right now.
Chapter 3 is a guided tour of the entire trading industry. Harris warns upfront it’s packed with jargon. He also says you can skip it if you already know this stuff. But if you’re new to how markets work, this chapter is the map you need before going deeper.
Chapter 2 of “Behavioral Finance for Private Banking” is where the book gets really practical. This is where Hens, De Giorgi, and Bachmann lay out the specific mental traps that mess up our investment decisions. And there are a lot of them.
In Part 1 we looked at how to get portfolio data from 13F filings and started breaking down Fictional Capital Management’s long book. Now we continue with more portfolio metrics and, more importantly, the liquidity analysis that catches the fund manager in a contradiction.
So we made it through the whole book. Seventeen posts later, here’s where I stand on “Introduction to Private Equity, Debt, and Real Assets” by Cyril Demaria (3rd edition, Wiley, ISBN 978-1-119-53737-3).
Chapter 8 of “The Hedge Fund Book” by Richard C. Wilson is about governance. If that word already made your eyes glaze over, stick with me. This is actually one of the more important chapters, because it explains why hedge funds blow up and how simple oversight structures can prevent it.
This is Part 2 of Chapter 1 from “Investing Psychology” by Tim Richards. If you missed the first part, go read Chapter 1 Part 1 first. We covered how your senses trick you. Now we get into how your brain takes shortcuts and how other people’s behavior messes with your money.
In Chapter 12, Larry Harris introduces us to the Bluffers. If the Informed Traders are the data scientists, the Bluffers are the illusionists. They don’t have any real information; they just want you to think they do.
Before getting into theory, Harris tells stories. Chapter 2 walks you through real trading scenarios, from a regular person buying stock to a soybean processor hedging in the futures pit. Each story shows a different corner of the market.
Chapter 2 of Behavioral Finance and Investor Types by Michael M. Pompian opens with a quote I really like. Meir Statman from Santa Clara University said: “People in standard finance are rational. People in behavioral finance are normal.” That pretty much sums up the whole chapter.