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See the decision-making process behind investments.
The Psychology of Investing is the first text of its kind to delve into the fascinating subject of how psychology affects investing. Its unique coverage describes how investors actually behave, the reasons and causes of that behavior, why the behavior hurts their wealth, and what they can do about it.
The fourth edition addresses the current financial crisis, has a new chapter on framing effects, and contains new evidence and ideas in every chapter.
"synopsis" may belong to another edition of this title.
Traditional finance has focused on developing the tools that investors use to optimize expected return and risk. Understanding the motivations behind this behavior is extremely important when applying these financial tools. This is the first text of its kind to delve into the fascinating and important subject of the psychology affecting investments!
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An old Wall Street adage states that two factors move the market: fear and greed. Although true, this characterization is far too simplistic. The human mind is very sophisticated, and human emotions are very complex. The emotions of fear and greed just don't adequately describe the psychology that affects people. This book is one of the first texts to delve into this fascinating and important subject.
Few other texts provide this information because traditional finance has focused on developing the tools that investors use to optimize expected return and risk. This endeavor has been fruitful, yielding tools such as asset pricing models, portfolio theories, and option pricing. Although investors should use these tools in their investment decision making, they typically do not. We tend not to use these tools because psychology affects our decisions more than financial theory does.
Unfortunately, your psychological biases inhibit your ability to make good investment decisions. By learning about your psychological biases, you can overcome them and increase your wealth. You will notice that most of the chapters are structured in a similar way. I first describe the psychological bias and illustrate it with everyday behavior (such as driving a car). The effect of the bias on investment decisions is then described. Lastly, I use academic studies to show that investors really do have the problem.
This material does not replace the investment texts of traditional finance. Understanding psychological biases complements the traditional finance tools. Indeed, after reading this book you should be convinced that traditional tools are valuable.
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Book Description Softcover. Condition: New. Brand New INTERNATIONAL EDITION, 4-6 days shipping! Same contents as the US edition with 3-5 days shipping. CD/DVD or access codes may not be included. Seller Inventory # 9780136117032
Book Description Prentice Hall, 2010. Paperback. Condition: New. Never used!. Seller Inventory # P110136117031
Book Description Prentice Hall, 2010. Paperback. Condition: New. 4. Seller Inventory # DADAX0136117031