Behavioral Finance and Wealth Management - How to Build Investment Strategies That Account for Investor Biases

Informationen zum Autor MICHAEL M. POMPIAN, CFA, CFP, is a partner at Mercer Investment Consulting, a firm serving institutional and private wealth clients. Prior to joining Mercer, he was a wealth management advisor with Merrill Lynch and PNC Private Bank, and served on the investment staff of a family office. Pompian is a Chartered Financial Analyst (CFA), a Certified Financial Planner (CFP), and a Certified Trust Financial Advisor (CTFA). He is also a member of the CFA Institute (formerly AIMR) and the New York Society of Security Analysts (NYSSA). He holds a BS in management from the University of New Hampshire and an MBA in finance from Tulane University. Pompian is a regular speaker on the subject of behavioral finance and has published several articles on the subject. He is married with three sons and can be reached at [e-mail]. Klappentext The book that applies behavioral finance to the real worldUnderstanding how to use behavioral finance theory in investing is a hot topic these days. Nobel laureate Daniel Kahneman has described financial advising as a prescriptive activity whose main objective should be to guide investors to make decisions that serve their best interests. The reality? That's easier said than done. In the Second Edition of Behavioral Finance and Wealth Management, Michael Pompian takes a practical approach to the growing science of behavioral finance, and puts it to use for real investors. He applies knowledge of 20 of the most prominent individual investor biases into "behaviorally-modified" asset allocation decisions. Offering investors and financial advisors a "self-help" book, Pompian shows how to create investment strategies that leverage the latest cutting edge research into behavioral biases of individual investors. This book:* Shows investors and financial advisors how to either moderate or adapt to behavioral biases, in order to improve investment results and identifies "the best practical allocation" for investment portfolios. Using these two sound approaches for guiding investment decision-making, behavioral biases are incorporated into the portfolio management process* Uses updated cases studies to show investors and financial advisors how an investor's behavior can be modified to improve investment decision-making* Provides useable methods for creating behaviorally modified investment portfolios, which may help investors to reach their long term financial goals* Heightens awareness of biases so that financial decisions and resulting economic outcomes are improved* Offers advice on managing the effects of each bias in order to improve investment resultsThis Second Edition illustrates investors' behavioral biases in detail and offers financial advisors and their clients practical advice about how to apply the science of behavioral finance to improve overall investment decision making. Zusammenfassung The book that applies behavioral finance to the real worldUnderstanding how to use behavioral finance theory in investing is a hot topic these days. Nobel laureate Daniel Kahneman has described financial advising as a prescriptive activity whose main objective should be to guide investors to make decisions that serve their best interests. The reality? That's easier said than done. In the Second Edition of Behavioral Finance and Wealth Management, Michael Pompian takes a practical approach to the growing science of behavioral finance, and puts it to use for real investors. He applies knowledge of 20 of the most prominent individual investor biases into "behaviorally-modified" asset allocation decisions. Offering investors and financial advisors a "self-help" book, Pompian shows how to create investment strategies that leverage the latest cutting edge research into behavioral biases of individual investors. This book:* Shows investors and financial advisors how to either moderate or adapt to behavioral biases, in orde...

Sommario

Preface xv
 
Acknowledgments xxiii
 
PART ONE Introduction to Behavioral Finance 1
 
CHAPTER 1 What Is Behavioral Finance? 3
 
Behavioral Finance: The Big Picture 4
 
Standard Finance versus Behavioral Finance 12
 
The Role of Behavioral Finance with Private Clients 19
 
How Practical Application of Behavioral Finance Can Create a Successful Advisory Relationship 19
 
Notes 21
 
CHAPTER 2 The History of Behavioral Finance Micro 23
 
Historical Perspective on the Link between Psychology and Economics 23
 
Modern Behavioral Finance 27
 
Psychographic Models Used in Behavioral Finance 36
 
Notes 40
 
CHAPTER 3 Introduction to Behavioral Biases 43
 
Introduction 43
 
Behavioral Biases Defined 44
 
Why Understanding and Identifying Behavioral Biases Is Important 45
 
Categorization of Behavioral Biases 46
 
Differences between Cognitive and Emotional Biases 46
 
Difference among Cognitive Biases 47
 
Emotional Biases 48
 
A Final Word on Biases 49
 
Summary of Part One 50
 
PART TWO Belief Perseverance Biases Defined and Illustrated 51
 
CHAPTER 4 Cognitive Dissonance Bias 53
 
Bias Description 53
 
Practical Application 55
 
Research Review 57
 
Diagnostic Testing 59
 
Advice 60
 
Conclusion 62
 
Notes 62
 
CHAPTER 5 Conservatism Bias 63
 
Bias Description 63
 
Practical Application 64
 
Research Review 67
 
Diagnostic Testing 69
 
Advice 70
 
Notes 71
 
CHAPTER 6 Confirmation Bias 73
 
Bias Description 73
 
Practical Application 75
 
Research Review 77
 
Diagnostic Testing 81
 
Advice 83
 
Notes 84
 
CHAPTER 7 Representativeness Bias 85
 
Bias Description 85
 
Practical Application 87
 
Research Review 89
 
Diagnostic Testing 93
 
Advice 94
 
Notes 97
 
CHAPTER 8 Illusion of Control Bias 99
 
Bias Description 99
 
Practical Application 100
 
Research Review 103
 
Diagnostic Testing 104
 
Advice 105
 
Final Thought 106
 
Notes 106
 
CHAPTER 9 Hindsight Bias 107
 
Bias Description 107
 
Practical Application 108
 
Research Review 109
 
Diagnostic Testing 112
 
Advice 113
 
Notes 114
 
PART THREE Information Processing Biases Defined and Illustrated 117
 
Overview of the Structure of Chapters 10 through 16 117
 
CHAPTER 10 Mental Accounting Bias 119
 
Bias Description 119
 
Practical Application 121
 
Research Review 123
 
Diagnostic Testing 128
 
Advice 130
 
The Behavioral Finance Approach to Asset Allocation based on Mental Accounting 133
 
Notes 134
 
CHAPTER 11 Anchoring and Adjustment Bias 135
 
Bias Description 135
 
Practical Application 136
 
Research Review 138
 
Diagnostic Testing 139
 
Advice 140
 
Bonus Discussion: Investment Strategies that Leverage Anchoring and Adjustment Bias 141
 
Notes 142
 
CHAPTER 12 Framing Bias 143
 
Bias Description 143
 
Practical Application 145
 
Research Review 148
 
Diagnostic Testing 150
 
Advice 152
 
Notes 153
 
CHAPTER 13 Availability Bias 155
 
Bias Description 155
 
Practical Application 157
 
Research Review 160
 
Diagnosti

Dettagli sul prodotto

• Autori: Michael Pompian, Michael M Pompian, Michael M. Pompian, Michael M. (Cfa Pompian, MM Pompian, POMPIAN MICHAEL M
• Editore: Wiley, John and Sons Ltd
• Lingue: Inglese
• Formato: Copertina rigida
• Pubblicazione: 27.01.2012
• EAN: 9781118014325
• ISBN: 978-1-118-01432-5
• Pagine: 352
• Serie: Wiley Finance; Wiley Finance Editions; The Wiley Finance Series; Wiley Desktop Editions; Wiley Finance; Wiley Finance Editions; Wiley Desktop Editions
• Categorie: Scienze sociali, diritto, economia > Economia > Economia aziendale; Kapitalanlage, Finance & Investments, Finanz- u. Anlagewesen, Kapitalanlagen u. Wertpapiere, Investments & Securities