Investors will be 'miles ahead' if they avoid these 3 things, 'How Not to Invest' author says

cnbc.com:

Barry Ritholtz had a hard time writing his first book, «Bailout Nation.»

Drafted in the midst of the 2008 financial crisis, the biggest challenge, he said, was that a different company «would blow up» every week.

It felt as if the writing «was never over,» said Ritholtz, the chairman and chief investment officer of Ritholtz Wealth Management, an investment advisory firm thatmanages more than $5 billion of assets.

By comparison, the new book was a «joy» to write, largely due to the benefit hindsight, said Ritholtz, who is also a prolific blogger and creator of the long-running finance podcast «Masters in Business.»

The book, «How Not to Invest: The Ideas, Numbers, and Behaviors That Destroy Wealth — And How to Avoid Them,» published March 18, is a history lesson of sorts.

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Ritholtz looks back at anecdotes across pop culture and finance — touching on Hollywood titans like Steven Spielberg, music sensations like The Beatles, and corporate pariahs like Elizabeth Holmes of Theranos — to illustrate the disconnect between how much people think they know and what they actually know. (Ritholtz' point being, The Beatles and films like «Raiders of the Lost Ark» were initially panned; Holmes, initially lauded, is now serving jail time.)

«It's a huge advantage to say, 'I know how the game ended,'» Ritholtz said. «What the analysts were saying in the second, third, fourth inning, they didn't know what they're talking about.»

CNBC spoke to Ritholtz about why people are often bad investors, why