"This refreshingly iconoclastic book awakens us all to how little we knowabout financial markets, and how much we have to discover. I particularlyenjoyed the reference to the emperor's clothes worn by the mutual fund industry.Shefrin's clear reaffirmation of the fallibility of professional investors willlead even the most impressionable of investors to consider, yet again, theadvantages of market indexing strategies."--John Bogle, Founder and SeniorChairman, The Vanguard Group, and author, Common Sense on Mutual Funds
Summary
Why do most financial decision-making models fail to factor in basic human nature? This guide to what really influences the decision-making process applies psychological research to stock selection, financial services and corporate financial strategy.
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
