- Hardcover: 640 pages
- Publisher: Wiley; 1 edition (February 10, 2014)
- Language: English
- ISBN-10: 1118492986
- ISBN-13: 978-1118492987
- Product Dimensions: 7 x 1.5 x 10 inches
- Shipping Weight: 2.8 pounds (View shipping rates and policies)
- Average Customer Review: 12 customer reviews
- Amazon Best Sellers Rank: #729,881 in Books (See Top 100 in Books)
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Investor Behavior: The Psychology of Financial Planning and Investing 1st Edition
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“Baker and Ricciardi have done an excellent job of soliciting articles that blend academic research with real-world applications that can be used by financial planners. Investor Behavior is an excellent book for anyone who wishes to detour from the beaten path of behavioral finance and to implement what has been learned about investor psychology to better understand traders and assist clients.”
— Financial Analysts Journal
From the Inside Flap
Why do investors behave as they do? Investor behavior often deviates from logic and reason. Emotional processes, mental mistakes, and individual personality traits complicate investment decisions and increase the difficulty of comprehending clients' judgments. Behavioral decision-making can also have a detrimental influence if investment professionals ignore or fail to grasp this aspect of decision-making.
Investor Behavior: The Psychology of Financial Planning and Investing is a collection of must-read chapters by leading scholars and practitioners. This book edited by H. Kent Baker and Victor Ricciardi, two leading experts in the psychology of investing, is indispensable for anyone who works with individual clients and needs to manage those difficult-to-predict investment decisions.
This comprehensive volume provides essential contributions to the field of behavioral finance and economics including mental mistakes (heuristics), emotional issues, bounded rationality, biases, and risk perception. Investor Behavior also goes beyond the basics, introducing new and cutting-edge research on individual behavior in areas including financial therapy, motivation and satisfaction, transpersonal economics, personality traits, financial coaching, money and happiness, retirement planning, neurofinance, and evidenced-based financial planning. The book concludes with an authoritative selection of developments in such behavioral topics as ethical and socially responsible investing, real estate investing, and mutual funds.
Each chapter in Investor Behavior focuses on real-world examples that can be easily understood and applied. Readers learn how practitioners are converting new research on human psychology into measurable performance gains. Current best practices and concrete applications for understanding and managing client behavior are presented alongside clear, scholarly explanations of theoretical principles.
Investor Behavior is more than just a collection of information about investing tendencies. Knowing what clients tend to do is important, but without an in-depth psychological perspective, financial planners and investment advisers cannot predict which strategies are in the client's best interests. Applying the behavioral principles—the why of financial decisions—gives investment professionals an edge when converting biases into performance.
This book could revolutionize how to approach client management. For both professionals who are new to the psychology of investing and those who want to stay current on essential research findings, Investor Behavior is required reading. The book is also highly valuable for educational purposes and includes discussion questions and answers for each chapter. Investment professionals, investors, and others interested in investor behavior cannot afford to overlook this book.
Top customer reviews
In fact, if I had to choose one single book to have on behavioral finance, it would be this one. Those unfamiliar with the field may want to first read an introductory book, such as Thinking Fast and Slow by Kahneman or Predictably Irrational by Ariely. After that, this is the book you should keep around. The depth and breadth within these 640 pages is impressive.
What I liked best is that the authors include abundant scholarly material while also covering a wide range of ideas that should be useful to practitioners. While the book can be used by students, academics, and investors, the primary beneficiaries may be financial planners and counselors, who should gain a big edge over competitors by using even a few of the thought provoking ideas in this book.
The book begins with an informative timeline of financial history and investment theory with an emphasis on behavioral issues such as the tulip mania of the 1600's, the work of Mackay in 1841 identifying bubbles and panics, George Selden' s identification of behavioral and emotional issues that influence stock market behavior, and the revolutionary development of behavioral finance in the early to mid-1990s.
In the course of this journey, through selected articles of prominent researchers, the authors introduce us to a broad range of interesting topics such as the illusion of control, cognitive biases, risk tolerances and emotion, transpersonal economics, neurofinance, safety-first portfolio theory, behavioral asset pricing models, the psychology of trading, household investment decisions, improving medical and financial outcomes, and financial therapy, coaching, and counseling.
There is a great need to help investors understand and deal with their behavioral biases. This book should be particularly useful to financial planners who wish to counsel their clients on behaviorally-based issues and apply behavioral principles to determine what is in their clients' best interests. I highly recommend this book.
This book is probably most useful if you pair it with books by Kahneman, or even "Fooled by Randomness" by Nassim Taleb. I suggest this approach because this book is a good store of ideas and methods and questions, and provides an academic approach to understanding and evaluating the influence of behavior on financial planning and investing. The true value of these serious essays can be unlocked once you have opened your mind to the idea that behavior has an outsize impact on how individuals approach money, as well as how institutions and professional traders and investors approach markets. Once you appreciate the importance of that, then this book becomes your reference guide as you look to go in-depth.
The book is well organized so that you can access essays based on topics that matter - e.g. a financial planner can look at consumer behavior, a markets professional can look at behavior and capital markets, etc.
Most recent customer reviews
Control is an illusion.Read more