I wanted to share a book I enjoyed recently called The Arrogance Cycle by Michael K Farr. It gives a detailed, comedic, and inside look at the emotions, entitlements, arrogance, and detached reality some investors have (both on Wall Street and Main Street). For anyone who enjoyed Michael Lewis’s Liar’s Poker you will enjoy The Arrogance Cycle.
In the context of our current recession, it is an amazing book, which reflects on the causes of surges and bursts, and analyzes the psychology and fundamentals of human behavior.
A great passage from Farr’s book:
“Optimism is a magnet. Who among us would not like to believe that tomorrow will be better than today – that we have the potential to be richer, more powerful, happier, and more content? It’s written into the human DNA. Unfortunately, the ingredients of optimism are too often the same ingredients that go into arrogance, and they’re largely driven by the subtleties of hope and a desire for certainty”
Wisdom like the above should help savy investors avoid the next inevitable surge and burst in the market. Don’t say I didn’t warn you!
Michael K Farr is the president of Farr, Miller & Washington, LLC and a guest commentator for CNBC, CNN, Bloomberg and Reuters. Michael previously wrote the book A Million is Not Enough: How to Retire with the Money You’ll Need.
For anyone interested in learning more about how money can affect someone’s thoughts and emotions, check out the video entitled “Mind over Money” I posted here.