Beyond greed and fear: understanding behavioral finance and the psychology of investing
- New York Oxford University Press 2016
- xxxiv, 368 p.
Table of Contents Preface Part I: What Is Behavioral Finance 1. Introduction 2. Heuristic-Driven Bias: The First Theme 3. Frame Dependence: The Second Theme 4. Inefficient Markets: The Third Theme Part II: Prediction 5. Trying to Predict the Market 6. Sentimental Journey: The Illusion of Validity 7. Picking Stocks to Beat the Market 8. Biased Reactions to Earnings Announcements Part III: Individual Investors 9. "Get-Evenitis": Riding Losers Too Long 10. Portfolios, Pyramids, Emotions, and Biases 11. Retirement Saving: Myopia and Self-Control Part IV: Institutional Investors 12. Open-Ended Mutual Funds: Misframing, "Hot Hands", and Obfuscation Games 13. Closed-End Funds: What Drives Discounts? 14. Fixed Income Securities: The Full Measure of Behavioral Phenomena 15. The Money Management Industry: Framing Effects, Style "Diversification", and Regret Part V: The Interface between Corporate Finance and Investment 16. Corporate Takeovers and the Winner's Curse 17. IPOs: Initial Underpricing, Long-term Underperformance, and "Hot-Issue" Markets 18. Optimism in Analysts' Earnings Predictions and Stock Recommendations Part VI: Options, Futures, and Foreign Exchange 19. Options: How They're Used, How They're Priced, and How They Reflect Sentiment 20. Commodity Futures: Orange Juice and Sentiment 21. Excessive Speculation in Foreign Exchange Markets Final Remarks Notes References Credits Index
Description Even 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.