This is an old blog post that I'm reposting now in SA. Originally posted 21st of February, 2014 in my Blue Giant blog.
Lately I have been reading a lot more to deepen my knowledge of the psychological side of investing, of behavioral finance especially.
First of all I'd like to recommend you to read this following small book called "The Little Book of Behavioral Investing" by J. Montier.
Montier has written a very interesting book on the behavioral psychology and markets. He refers to multiple interesting research papers and keeps his text friendly and understandable to everyone.
I wholeheartedly recommend this book if you do not already possess great knowledge on the subject.
Another great and very interesting book is "Fooled by Randomness" by Nassim Nicholas Taleb (The author of famous "The Black Swan"). It is 291 very interesting pages talking about chance, human behaviour and people's their understanding of mathematics. By mathematics I mean he talk about how people do not correctly understand the likelihood of events. Such as likelihood of extreme market events, or just how doctors do not understand what it actually means when you have a 95% chance to heal and 5% chance to die due to your surgery.
Very interesting book for everyone to read.
At the moment I am reading "Beyond Greed and Fear" by Hersh Shefrin. As you can guess it focuses on behavioral finance and I have now started to read through it to deepen my knowledge on the subject. My master's thesis (dissertation) will focus on value investing returns and great part of my thesis will focus on explaining market behavior by behavioral finance.
It is a book I bought after some recommendations and so far it seems highly interesting so anyone interested to continue deepening their understanding is highly recommended to grab a copy.