Beyond Greed and Fear: Understanding Behavioral Finance and the Psychology of Investing (Financial Management Association Survey and Synthesis)

Three themes are the common thread throughout this book.Heuristic-driven Bias is one of them. It includesAvailability Bias, Hindsight Bias, Familiarity Bias,Rule of 5, 1/n-rule (naive diversification), Over-confidenceand Optimism.Aversion to Loss and Aversion to Ambiguity; representative-ness, Consevatism due to Anchoring-and-(lack of) adjustment,Illusion to Validity are also discussed in this book.I do not agree with the Gamblers' Fallacy in the stockmarket. The stock market was compared to the tossing ofa coin. They are different. As the market rises, the risksof a correction or a bear definitely increases whereas theprobability of tossing a coin to land a head of tail isconstant all the time.Hindsight Bias was not well defined in this book. This booksaid there are more male traders than women (75% to 25%).Surprisingly, women make better traders, albeit only slightly.By the next edition, I look forward to more 'meat' in the book.Practical application ideas seem insufficient here. It isa book more for you to understand human behaviour in thestock market. A worthwhile read.

Everithing was perfect The book arrived on time in very good form

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A great account of behavioral insights with the most relevant examples and illustrations

I recently quit my job to become a full time trader. My goal is to read one book a week and this was the second book I read. To be honest this book did not provide much insight on the market, it just rehashed things we all already know. The book was written by a professor and he referenced a lot of his colleagues, it's more like a text book. I have nothing against professors but i don't believe the author has never done any actual trading so you have to take his opinions for what they are worth. There are some good points in the book but they are things you should know if you are a trader. And quit frankly there are some things in the book I completely disagree with - he mentioned in one of the early chapter that traders develop heuristic biases based on rules of thumb and those rules of thumb lead traders down the wrong path. I believe that ever trader should have rules they live by like selling a loosing stock when it's looses 10% of it's value, have defined entry points, a margin % to equity, etc. There may come a time when you need to redefine your rules but every traders needs to have rules they live by.My. 02 is that you can skipped this book if you are looking for useful information on the psychology of trading. This book is good if you want to know what traders should and shouldn't do from a theoretical standpoint but not a good book if you want to become an actual trader.Dmonk

Books cover was covered in a gooey molasses material, I had to use cleaning detergents to remove it. The book is also highlighted and inscribed in blue ink.

This book contains some interesting tidbits. Unfortunately, it is rife with serious errors and unwarranted assertions.For example, in chapter 6 Prof. Shefrin attempts to discredit contrarian sentiment indicators. For all I know they may be worthy of discredit. Unfortunately for his argument, the data he chooses to display, Figures 6-1 and 6-3, appear to support the value of these indicators.He declares the practice of investing in companies one knows to be "familiarity bias". While this is apt for employees with all funds in the company stock, he also applies it to Peter Lynch. According to Shefrin, Lynch beat the market 11 out of 13 years, and beat his nearest competitor by 6%(!) per year. Shefrin grudgingly admits there may have been some skill involved, but goes on to inform us that _investors_ "attribute too much of that success to skill rather than luck". Uh-huh.In his chapter on public offerings, Prof. Shefrin declares that existing shareholders are being ripped off, because dramatic gains at the start of trading demonstrate the IPO could have sold at a higher price. Apparently Prof. Shefrin is unaware that underwriters enter into an obligation to support the aftermarket, and would be unlikely proceed without a good chance of an aftermarket pop, nor would subscribers purchase.The chapter on closed end fund discounts is interesting. Unfortunately Prof. Shefrin fails to include the net present value of future management fees in his discussion.Perhaps there will be a much revised and improved second edition.

If you like studying psychology, human behavior, or the behavior component of the financial markets I think you will enjoy this book

When this book was first published, it may have been an eye opener to the non-academic audience it seems to have been aimed at. Now that behavioural finance is widely accepted, and there are other books for the general reader, its weaknesses become obvious.This is a book from the "I'm clever and everyone else is stupid" school of writing - and the author is not as good a writer as Nicholas Taleb. As one small example, we are encouraged to sneer at people who have chosen the wrong model of the market (e.g. momentum players or contrarian players), without any hint that the author has any techniques or analysis to determine which model to use when, and with a strong "they are wrong 50% of the time" attitude.The book does not cover today's full spread of behavioural finance. We have issues around "framing" well explained and explored. The tendency for people to minimise regret rather than maximise wealth, the power of recent memory, and the mis-use of mental models are all covered, but the chain from psychology to these symptoms is not really mapped or explored.And then the second half of the book is taken up with examples of market inefficiency, with no real explanation of the causes, and no real attempt to link these to human behaviour.For the academicly-minded, the references are pulled from a surprisingly small group of authors - though it was probably not so surprising given when the book was written. And for the general reader it suffers from not having a narrative thread that builds through the book.No doubt a 5-star book when first published; now there are so many other books out there there must be many better. I am starting in to James Montier "Behavioural Investing" - and so far so good.

For everyone interested in a really good overview in the findings of behavioral finance: this is the one to read! Shefrin does a great job with this book!

interesting and useful!

Eigentlich bin ich, was die Behavioral Finance angeht ein großer Fan von Robert Shiller, aber was Shefrin hier in seinem Buch aufzeigt ist mindestens ebenbürtig. Ich kann das Buch jedem empfehlen der mehr wissen will über die Entscheidungen und die Verhaltensmuster an der Börse. Fernab der klassischen Kapitalmarkttheorien geht es hierbei wirklich hauptsächlich darum die Psyche der Anleger zu verstehen und daraus für sich Schritte abzuleiten, um ein besserer Investor zu werden. Für jeden Anleger ein tolles Buch und für alle die den Kapitalmärkten gegenüber noch skeptisch sind auch!

Wer sich mit der Behavioral Corporate Finance beschäftigt kommt neben deutschen Größen wie v. Nitzsch und Goldberg nicht an Shefrin vorbei.Beyond Greed and Fear ist ein sehr intuitiv geschriebenes Buch in sehr gutem, einfach verständlichem Englisch. Es liest sich wunderbar.