Successful investing is hard, but it doesn't require genius.
Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.
Successful investing requires the rare ability to identify and overcome one's own psychological weaknesses.
Behavioural finance attempts to explain why people make financial decisions that are contrary to their own interests.
Behavioural finance has a lot to offer in terms of understanding psychology and the behaviour of investors, particularly the mistakes that they make.
Much of the field attempts to extrapolate larger, macro trends of influence, such as how human behaviour might move the market.
We can also focus on how the insights from the field of behavioural finance can benefit individual investors. Primarily, we are interested in how we can learn to spot and correct investing mistakes in order to yield greater profits.
Some insights one can focus on in behaviour finance are:
Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.
Successful investing requires the rare ability to identify and overcome one's own psychological weaknesses.
Behavioural finance attempts to explain why people make financial decisions that are contrary to their own interests.
Behavioural finance has a lot to offer in terms of understanding psychology and the behaviour of investors, particularly the mistakes that they make.
Much of the field attempts to extrapolate larger, macro trends of influence, such as how human behaviour might move the market.
We can also focus on how the insights from the field of behavioural finance can benefit individual investors. Primarily, we are interested in how we can learn to spot and correct investing mistakes in order to yield greater profits.
Some insights one can focus on in behaviour finance are:
- Overconfidence
- Selective Memory
- Self-Handicapping
- Loss Aversion
- Sunk Costs
- Anchoring
- Confirmation Bias
- Mental Accounting
- Framing Effect
- Herding
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