Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing

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Oxford University Press, 2002 - Social Science - 368 pages
14 Reviews
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.
 

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LibraryThing Review

User Review  - browner56 - LibraryThing

While the behavioral approach to finance and economics has gained considerable traction in academic circles over recent years, it is still not sufficiently established that many semester-long courses ... Read full review

Beyond greed and fear: understanding behavioral finance and the psychology of investing

User Review  - Not Available - Book Verdict

Behavioral finance is defined by Shefrin (finance, Santa Clara Univ.) as "a rapidly growing area that deals with the influence of psychology on the behavior of financial practitioners." This ... Read full review

Contents

The Second Theme
23
Trying to Predict the Market
45
The Illusion of Validity
59
Biased Reactions to Earnings Announcements
91
Individual Investors
105
Portfolios Pyramids Emotions and Biases
119
Institutional Investors
157
What Drives Discounts?
175
Framing
213
Corporate Takeovers and the Winners Curse
227
Optimism in Analysts Earnings Predictions
257
Options Futures and Foreign Exchange
271
Final Remarks
309
References
333
Credits
351
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Page 333 - Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment.

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About the author (2002)


Hersh Shefrin holds the Mario L. Belotti Chair in Finance at the Leavey School of Business, Santa Clara University.

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