What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions [Hardcover]

Meir Statman (Author)

Book Description

Publication Date: October 26, 2010

WHAT INVESTORS WANT

Praise for What Investors Really Want

"We all share behavioral traits that are major roadblocks to intelligent financial decisions. Bottom line: if you really want to achieve investment success, understand yourself and eliminate or minimize these traits. This book will help you do exactly that."
-- John C. Bogle, Founder, Vanguard Funds

"What Investors Really Want enables us to "post mortem" the financial decisions of ourselves and others. The book is extremely valuable for theory, as a survey of how the human animal makes financial decisions, and for the practice of making smarter financial decisions."
--Harry M. Markowitz, Rady School of Management, University of California, San Diego; winner, Nobel Memorial Prize in Economic Sciences

"In investing, we are often our own worst enemies. Meir Statman, an expert in behavioral finance, explains the common errors to which we are prone and helps us make smarter decisions about our investments."
--Burton Malkiel, bestelling author of A Random Walk Down Wall Street

"A masterly review of the many pitfalls and challenges facing market participants today, written by one of the founders of the field of behavioral finance. This volume should be required reading for all investors and their financial advisors!"
--Andrew W. Lo, Harris & Harris Group Professor of Finance at the MIT Sloan School of Management

"What a gem! Meir Statman is a wise and engaging teacher, and after reading his book, I will be a wiser, better, less anxious investor."
--Don Ezra, co-chair, global consulting, Russell Investments, and co-author of Pension Fund Excellence and The Retirement Plan Solution

"The first step to good investing is always the same, 'know thyself'. If you read this book and don't recognize a lot of yourself in it, you're just not paying attention!"
--Cliff Asness, founding and managing principal, AQR Capital Management LLC

"Meir Statman, a leading light of behavioral finance, shines the bright light of modern neuropsychology on all the mental demons that conspire to make you poor. He'll make you laugh, he'll make you cry and, best of all, he'll improve your bottom line."
--William Bernstein, bestselling author of The Intelligent Asset Allocator, The Four Pillars of Investing, and The Investor's Manifesto; co-founder, Efficient Frontier Advisors

“The result is a message that is not only well presented, but also richly worth reading.”
--Barron’s

"An excellent introduction to the behavioural science world of investing and individuals."
--FT Advisor

Combining the new field of behavioral finance with the real world of investing, this engaging new book explores the mind-sets and motivations behind the major money decisions--and most common mistakes—that investors make every day. With insider's insight, and a storyteller's voice, behavioral finance expert Meir Statman reveals What Investors Really Want . . .

• Investors want bigger profits with lower risks. How our desire for free investment lunches can leave us with no lunches
• Investors want to play and win. How our desire to win the investment game can turn us into losers
• Investors want to save money for tomorrow and spend it today. How we struggle between spending too much and spending too little
• Investors want status, respect, and social responsibility. How to know what's really important in life
• Investors do not want to face financial losses. How to recognize and confront the regret that accompanies losses

You'll also learn how age, gender, genetics, and personality affect your investment decisions and how people of different countries and cultures think about risks and returns, poverty, and wealth. You'll discover how behavioral finance provides key insights into the behavior that has rocked investment markets in recent years. And, most important, you'll learn to recognize the desires, thoughts, and emotions that drive your own investment decisions--so you can drive better on your road to investment success.

Editorial Reviews

About the Author

Meir Statman is the Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University, and Visiting Professor at Tilburg University in the Netherlands. His research on behavioral finance has been supported by the National Science Foundation, CFA Institute, and Investment Management Consultants Association (IMCA) and has been published in the Journal of Finance, Financial Analysts Journal, Journal of Portfolio Management, and many other publications. A recipient of two IMCA Journal Awards, the Moskowitz Prize for Best Paper on Socially Responsible Investing, and three Graham and Dodd Awards, Statman consults with many investment companies and presents his work to academics and professionals in the U.S. and abroad.

Product Details

• Hardcover: 304 pages
• Publisher: McGraw-Hill; 1 edition (October 26, 2010)
• Language: English
• ISBN-10: 0071741658
• ISBN-13: 978-0071741651
• Product Dimensions: 9.3 x 6.2 x 1.1 inches
• Shipping Weight: 2.8 pounds (View shipping rates and policies)
• Average Customer Review: 4.5 out of 5 stars  See all reviews (16 customer reviews)
• Amazon Best Sellers Rank: #217,319 in Books (See Top 100 in Books)

More About the Author

Meir Statman is the Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University and Visiting Professor at Tilburg University in the Netherlands. His research focuses on behavioral finance. He attempts to understand how investors and managers make financial decisions and how these decisions are reflected in financial markets. Meir's book, "What Investors Really Want," has just been published by McGraw-Hill. The book's subtitles are "Know What Drives Investor Behavior and Make Better Financial Decisions," and "Learn the lessons of behavioral finance."
The questions he addresses include: What are the cognitive errors and emotions that influence investors? What are investor aspirations? How can financial advisors and plan sponsors help investors? What is the nature of risk and regret? How do investors form portfolios? How successful are tactical asset allocation and strategic asset allocation? What determines stock returns? What are the effects of sentiment? How successful are socially responsible investors?
Meir's research has been published in the Journal of Finance, the Journal of Financial Economics, the Review of Financial Studies, the Journal of Financial and Quantitative Analysis, the Financial Analysts Journal, the Journal of Portfolio Management, and many other journals. The research has been supported by the National Science Foundation, the Research Foundation of the CFA Institute, and the Investment Management Consultants Association (IMCA). Meir is a member of the Editorial Board of the Financial Analysts Journal, the Advisory Board of the Journal of Portfolio Management, the Journal of Wealth Management and the Journal of Investment Consulting, an Associate Editor of the Journal of Financial Research, the Journal of Behavioral Finance, and the Journal of Investment Management and a recipient of a Batterymarch Fellowship, a William F. Sharpe Best Paper Award, a Bernstein Fabozzi/Jacobs Levy Outstanding Article Award, a Davis Ethics Award, a Moskowitz Prize for best paper on socially responsible investing, two Baker IMCA Awards, and three Graham and Dodd Awards. Meir consults with many investment companies and presents his work to academics and professionals in many forums in the U.S. and abroad.
Meir received his Ph.D. from Columbia University and his B.A. and M.B.A. from the Hebrew University of Jerusalem.

Customer Reviews

Most Helpful Customer Reviews

24 of 24 people found the following review helpful:

5.0 out of 5 stars A wonderful read, November 13, 2010

By 

Sanjiv Das (Moraga, CA USA) - See all my reviews

This review is from: What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions (Hardcover)

A terrific book by one of the founders of the field of behavioral finance! I have read many of Meir's research articles, and I thought that "What Investors Really Want" (WIRW) would be a presentation for the masses of the ideas and history of behavioral finance. But it is much more. There is a perspective here that transcends the academic research in the area, and provides a fresh, humorous, and engaging view of how our portfolios are more than just utilitarian objects, but that they have vast expressive and emotional roles in our lives. So this book is not just about investing and behavior, but about how the biases we portray in investing also pervade many other aspects of our lives. We may be better at managing biases in other areas of life, and may be worse at it with our portfolios. Or vice-versa, and Meir's research-driven portrayal of how our portfolios satisfy our many needs is a splendid primer on life! Far from being only a book for the masses, WIRW is thoroughly referenced, and I am sure that PhD students looking for a comprehensive reading on Behavioral Finance will get a deeply informed perspective. I found the bibliography in the book to be the most detailed one for the field---it is an added bonus. Most of all, I could not stop smiling as Meir poked fun at me (and all of us of the homo-miseconomicus tribe) as he explains what we really want as opposed to what we think we want.

7 of 7 people found the following review helpful:

5.0 out of 5 stars Great Book and Fantastic Investment, December 31, 2010

By 

An Educated Investor (Tucson, AZ, USA) - See all my reviews

This review is from: What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions (Hardcover)

Prof. Statman's book seamlessly combines investing, finance, behavioral and real life lessons, and the book is both educational and entertaining to read. It reminds us that investing is more than money and we should expect the benefits to be more than financial (utilitarian). It dispels some old illusions such as "we should use reason, not emotions, when we make investment decisions." He indicates that even though emotions complement reason more often than they interfere with it, the interaction between emotions and reason is mostly beneficial.

It is also sobering to know that being a retail trader is like playing tennis against an unknown professional player who holds both superior knowledge and better equipment/techniques.

Prof. Statman's research on the key role of financial advisors is very enlightening. Financial advisors main job is to manage investors financial well-being rather than manage just their investments.

Prof. Statman's research also shows why so many retail and institutional investors share the same cognitive errors that cause them to make poor investment decisions. His research strongly encourages investors to invest in well diversified portfolios and keep emotions at bay by not hanging onto losers due to emotional attachment. He says that wanting to get even (get our money back) has probably caused more destruction on investment portfolios than anything else. Reluctance to realize losses is also great news for managers of terrible mutual funds.

And he tells us about cognitive impairments among older people and the problems associated with such mental decline. This is very important to be aware of and be prepared for regardless of your age.

In summary, this book is multi-dimensional and extremely well researched and well written. Investing your money and your time in this book should pay handsome dividends in your life.

7 of 7 people found the following review helpful:

5.0 out of 5 stars dont invest in stocks before reading this book, November 27, 2010

By 

Anirban - See all my reviews

This review is from: What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions (Hardcover)

I could not stop until I had finished this book cover to cover.

This is a must read for any newbie planning to invest some hard earned cash into stocks. In fact, I would go so far as to say that a lay person should NOT play in stocks without understanding some of the `behavioral' aspects of investing that the author talks about.

My only regret..why didn't I come across this book in 2007, before the markets tanked!!