This is one of several mysteries about the book Seeking Wisdom by Peter Bevelin. Who is the author? We know his name, but not his background. Ten minutes on Google made me no better-informed. The book was extremely difficult to obtain - it appears to be self-published and has hitherto only been available from an unbelievably obscure distributor or from a few second-hand book stores in Omaha. And whoever sub-edited the book should think of another career. Nevertheless, Seeking Wisdom is well worth reading and to help, I have persuaded the distributor to release a few copies to the IC Bookshop, where it is apparently already selling well.
The book explores why we often make bad decisions, and sets out what we can do about this problem. It has a clear bias towards investment - containing relatively little Origin of the Species, whereas Munger is quoted about every five pages. But Seeking Wisdom should be a valuable read for anyone.
It has four sections, the first of which briefly sets out how our evolution has set us up to make a lot of bad decisions. The human brain and its psychology started to evolve 5m years ago. Modern society emerged 4,990,000 years later. Inevitably, we are still carrying a lot of baggage from the first era, when it paid to make snap judgements and to rely on emotion rather than reason. Or as Charlie Munger puts it, "If you want to avoid irrationality, it helps to understand the quirks in your own mental wiring".
Then we get to the book's main thesis. There are 39 "misjudgments explained by psychology". For example, when you had it out with Bloggs, did you make due allowance for misjudgment source number 21, "bias from disliking"?; and have you got number 32 - your "do-nothing syndrome" - appropriately aligned with number 33, your "do-something syndrome"? Admittedly, some of the misjudgments in Mr Bevelin's list can seem vapid. If we need to be told that impatience makes for misjudgments, there is no hope for us. We should also be familiar with "the man with the hammer tendency". Nevertheless, surveying the whole universe of bad decision-making clinically set out over 60 pages is a thought-provoking process.
And you need not be intimidated by the section three: "The physics and mathematics of misjudgments". In simple terms, it describes useful basic concepts from these two areas. Focusing on "isolated numbers" is a section that could be usefully read by every BBC business journalist, who too often report along these lines: "Transcorp made a huge $1bn in profits", without any reference to the critical issue of how much equity was employed to make those profits. And here was a calculation that tied me up for a while: if you finance 10 mutually independent start-ups each with a 40 per cent chance of succeeding, what is the chance of least one of them succeeding? It would be useful if you jotted down your answer in the margin now.
Section four proposes "Guidelines for Better Thinking". These include "Models of Reality", "Attitudes", "Simplification" (Munger: "People calculate too much and think too little"), "Quantification" (Buffett: "While an increase in earnings from $8m to $72m sounds terrific - and usually is - you should not automatically assume that to be the case…"), and "Goals".
Of course, no one will ever correct every source of misjudgment described in this book, and anyone inspired to read it will already be deploying at least a third of what it seeks to explain. But if you can simply get your arms around another 10 per cent of what Peter Bevelin sets out, you will surely feel the benefits - in your pocket as well as in your mental health. It is very unpretentious, plainly written, and will at the very least leave you able to quote virtually every wise man since Socrates. Seeking Wisdom is available from the IC Bookshop online or on 0800 435060 at £25 post-paid.
If your note in your margin does not say 99.4 per cent, then get on the phone now!
Alistair Blair, a past winner of the Business Writer of the Year Award, has worked in investment banking and fund management. Email: a7461blair@pobox.com
