A great example of how not to think about investing

The constantly repeating newsflash: most market prognosticators are useless.  Roger Lowenstein has this article talking about the latest book by James Glassman, he same author who brought you Dow 36,000.  In his defense, Glassman will eventually be right, I guess. 

The first rule of investing is not to lose money.  The second rule is not to forget rule number one.  The best way to begin investing is to learn what to avoid, rather than what to seek out.  You'll avoid the confirmation bias this way.   It is interesting that this psychology shortfall as well as the recency bias is on show by Glassman when talking about psychology:

"Glassman argues for reducing exposure to U.S. stocks, investing in “bear funds,” and hedging through put options. He is full of praise for “value” stocks -- by which he means, stocks that trade at low multiples of assets or earnings.

...

Glassman seems to like value stocks because they have performed in the past. You could have said that about Lucent in 1999

...

Glassman says value stocks benefit from “investor psychology.” He says they offer more reward with lower risk. But he still defines “risk” in terms of volatility. And he doesn’t seem to have learned that psychology can change. His new book, he says, “fits the psychology of investors” -- as if that condition were immutable."

Interesting article.   Mr. Glassman seems like the real life Mr. Market judging from his massive manic depressive rollercoaster market commentary.