Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of InvestingEven the best Wall Street investors make mistakes. No matter how savvy or experienced, all financial practitioners eventually let bias, overconfidence, and emotion cloud their judgement and misguide their actions. Yet most financial decision-making models fail to factor in these fundamentals of human nature. In Beyond Greed and Fear, the most authoritative guide to what really influences the decision-making process, Hersh Shefrin uses the latest psychological research to help us understand the human behavior that guides stock selection, financial services, and corporate financial strategy. Shefrin argues that financial practitioners must acknowledge and understand behavioral finance--the application of psychology to financial behavior--in order to avoid many of the investment pitfalls caused by human error. Through colorful, often humorous real-world examples, Shefrin points out the common but costly mistakes that money managers, security analysts, financial planners, investment bankers, and corporate leaders make, so that readers gain valuable insights into their own financial decisions and those of their employees, asset managers, and advisors. According to Shefrin, the financial community ignores the psychology of investing at its own peril. Beyond Greed and Fear illuminates behavioral finance for today's investor. It will help practitioners to recognize--and avoid--bias and errors in their decisions, and to modify and improve their overall investment strategies. |
Contents
The Third Theme | |
Trying to Predict the Market | |
The Illusion of Validity | |
Picking Stocks to Beat the Market | |
Behavioral Phenomena | |
Framing | |
Corporate Takeovers and the Winners Curse | |
Initial Underpricing Longterm | |
and Stock Recommendations | |
How Theyre Used How Theyre | |
Sentiment | |
Excessive Speculation in Foreign Exchange | |
Biased Reactions to Earnings Announcements | |
Riding Losers Too Long | |
Portfolios Pyramids Emotions and Biases | |
Myopia and SelfControl | |
Misframing Hot | |
Final Remarks | |
References | 61 |
Credits | 2003 |
2023 | |
Common terms and phrases
allocation analysts announcement assets AT&T Barron’s beat the market behavioral finance benchmark bond Bondt Boston Chicken brokerage Bullish Sentiment Index chapter Citron closed-end funds coin Copyright December described discount discussed dividends Dow Jones earnings surprises Economics equity evidence expectations figure firms forecasts frame dependence fund managers gambler’s fallacy heuristic heuristic-driven bias hindsight bias implied volatility individual investors inflation interest rates investment issue January Jonathan Clements Jones & Company Journal of Finance long-term losers loss aversion Louis Rukeyser market efficiency Meir Statman mental accounting million mispricing momentum money managers months mutual fund offer options Orange County orange juice overconfidence overreaction percent performance period portfolio predictions premium recommended stocks regret Reprinted by permission retirement returns Richard Thaler rights reserved worldwide risk Robert Robert Citron securities sell Shleifer stock price strategists strategy tend toss trading underperformance underreact Wall Street Journal Wall treet Week winners