Оглавление
Michael M. Pompian. Behavioral Finance and Your Portfolio
Table of Contents
List of Tables
List of Illustrations
Guide
Pages
BEHAVIORAL FINANCE AND YOUR PORTFOLIO. A NAVIGATION GUIDE FOR BUILDING WEALTH
Preface
A Challenging Environment
Why This Book?
Who Should Use This Book?
When to Use This Book
Plan of the Book
Acknowledgments
About the Author
PART I INTRODUCTION TO BEHAVIORAL FINANCE
1 What Is Behavioral Finance and Why Does It Matter?
Why Behavioral Finance Matters
Behavioral Finance: The Big Picture
Key Figures in the Field
Behavioral Finance Micro versus Behavioral Finance Macro
Standard Finance versus Behavioral Finance
Overview
Efficient Markets versus Irrational Markets
Fundamental Anomalies
Technical Anomalies
Calendar Anomalies
Rational Economic Man versus Behaviorally Biased Man
Notes
2 Introduction to Behavioral Biases
Introduction
Behavioral Biases Defined
Why Understanding and Identifying Behavioral Biases Is Crucial
How to Identify Behavioral Biases
Categorization of Behavioral Biases
Differences between Cognitive and Emotional Biases
Difference among Cognitive Biases
Belief Perseverance Biases
Information-Processing Biases
Emotional Biases
A Final Word on Biases
PART II BELIEF PERSEVERANCE BIASES DEFINED AND ILLUSTRATED
3 Belief Perseverance Bias #1: Cognitive Dissonance Bias
Bias Description
General Description
Example of Cognitive Dissonance
Implications for Investors
BOX 3.1 Cognitive Dissonance Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Cognitive Dissonance Bias?
Cognitive Dissonance Bias Test
Test Results Analysis
Investment Advice
Note
4 Belief Perseverance Bias #2: Conservatism Bias
Bias Description
General Description
Example of Conservatism Bias
Implications for Investors
BOX 4.1 Conservatism Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Conservatism Bias?
Conservatism Bias Test
Test Results Analysis
Investment Advice
Notes
5 Belief Perseverance Bias #3: Confirmation Bias
Bias Description
General Description
Example of Confirmation Bias
Implications for Investors
BOX 5.1 Confirmation Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Confirmation Bias?
Confirmation Bias Test
Test Results Analysis
Investment Advice
6 Belief Perseverance Bias #4: Representativeness Bias
Bias Description
General Description
Examples of Representativeness Bias
Miniature Case Study 1: Base-Rate Neglect. Case Presentation
Analysis
Miniature Case Study 2: Sample-Size Neglect. Case Presentation
Analysis
Implications for Investors
BOX 6.1 Harmful Effects of Representativeness Bias. Examples of the Harmful Effects of Sample-Size Neglect for Investors
Examples of the Harmful Effects of Base-Rate Neglect for Investors
Am I Subject to Representativeness Bias?
Base-Rate Neglect Representativeness Bias Test
Sample-Size Neglect Representativeness Bias Test
Test Results Analysis
Investment Advice
Advice for Base-Rate Neglect
Advice for Sample-Size Neglect
Note
7 Belief Perseverance Bias #5: Illusion-of-Control Bias
Bias Description
General Description
Example of Illusion of Control Bias
Implications for Investors
BOX 7.1 Illusion-of-Control Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Illusion of Control Bias?
Illusion of Control Bias Test
Test Results Analysis
Investment Advice
Notes
8 Belief Perseverance Bias #6: Hindsight Bias
Bias Description
General Description
Example of Hindsight Bias
Implications for Investors
BOX 8.1 Hindsight Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Hindsight Bias?
Hindsight Bias Test
Test Results Analysis
Investment Advice
PART III INFORMATION PROCESSING BIASES DEFINED AND ILLUSTRATED
9 Information Processing Bias #1: Mental Accounting Bias
Bias Description
General Description
Practical Application
Implications for Investors
BOX 9.1 Mental Accounting Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Mental Accounting Bias?
Mental Accounting Bias Test
Test Results Analysis
Investment Advice
Notes
10 Information Processing Bias #2: Anchoring Bias
Bias Description
General Description
Example of Anchoring and Bias
Miniature Case Study: Anchoring Bias. Case Presentation
Analysis
Implications for Investors
BOX 10.1 Anchoring Bias: Behaviors That Can Cause Investor Mistakes
Am I Subject to Anchoring Bias?
Anchoring Bias Test
Test Results Analysis
Investment Advice
Bonus Discussion: Investment Strategies That Leverage Anchoring Bias
11 Information Processing Bias #3: Framing Bias
Bias Description
General Description
Example of Framing Bias
Implications for Investors
BOX 11.1 Framing Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Framing Bias?
Framing Bias Mini-Test 1
Framing Bias Mini-Test 2
Test Results Analysis
Investment Advice
12 Information Processing Bias #4: Availability Bias
Bias Description
General Description
Example of Availability Bias
Special Topic: Which Political Party Is Best for the Stock Market?
Implications for Investors
BOX 12.1 Availability Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Availability Bias?
Availability Bias Test
Test Results Analysis
Investment Advice
Notes
13 Information Processing Bias #5: Self-Attribution Bias
Bias Description
General Description
Example of Self-Attribution Bias
Implications for Investors
BOX 13.1 Self-Attribution Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Self-Attribution Bias?
Self-Attribution Test
Test Results Analysis
Investment Advice
Note
14 Information Processing Bias #6: Outcome Bias
Bias Description
General Description
Example of Outcome Bias
Implications for Investors
BOX 14.1 Outcome Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Recency Bias?
Diagnostic Quiz: Review
Investment Advice
Note
15 Information Processing Bias #7: Recency Bias
Bias Description
General Description
Example of Recency Bias
Implications for Investors
BOX 15.1 Recency Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Recency Bias?
Recency Bias Test
Test Results Analysis
Investment Advice
PART IV EMOTIONAL BIASES DEFINED AND ILLUSTRATED
16 Emotional Bias #1: Loss Aversion Bias
Bias Description
General Description
Example of Loss Aversion Bias
Implications for Investors
BOX 16.1 Loss Aversion Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Loss Aversion Bias?
Loss Aversion Bias Test
Test Results Analysis
Investment Advice
Note
17 Emotional Bias #2: Overconfidence Bias
Bias Description
General Description
Examples of Overconfidence Bias. Prediction Overconfidence
Certainty Overconfidence
Implications for Investors
BOX 17.1 Overconfidence Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Overconfidence Bias?
Prediction Overconfidence Bias Test
Certainty Overconfidence Bias Test
Prediction Overconfidence Bias Test Results Analysis
Certainty Overconfidence Bias Test Results Analysis
Investment Advice
A Final Word on Overconfidence
Notes
18 Emotional Bias #3: Self-Control Bias
Bias Description
General Description
Example of Self-Control Bias
Implications for Investors
BOX 18.1 Self-Control Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Self-Control Bias?
Test Results Analysis
Investment Advice
Note
19 Emotional Bias #4: Status Quo Bias
Bias Description
General Description
Example of Status Quo Bias
Implications for Investors
BOX 19.1 Status Quo Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Status Quo Bias?
Status Quo Bias Test
Test Results Analysis
Investment Advice
Note
20 Emotional Bias #5: Endowment Bias
Bias Description
General Description
Example of Endowment Bias
Implications for Investors
BOX 20.1 Endowment Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Endowment Bias?
Endowment Bias Test
Test Results Analysis
Investment Advice
Note
21 Emotional Bias #6: Regret Aversion Bias
Bias Description
General Description
Example of Regret Bias
Implications for Investors
BOX 21.1 Regret Aversion Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Regret Bias?
Regret Aversion Bias Test
Test Result Analysis
Advice
22 Emotional Bias #7: Affinity Bias
Bias Description
General Description
Example of Affinity Bias
Implications for Investors
BOX 22.1 Affinity Bias: Behaviors That Can Cause Investment Mistakes
Am I Subject to Affinity Bias?
Investment Advice
Note
PART V BEHAVIORAL INVESTOR TYPES
23 Staying on Target to Reach Financial Goals Is Hard
Non-Financial Examples of Self-Defeating Behavior
Example 1: The Yo-Yo Dieter
Example 2: The Educated Smoker
Financial Examples of Self-Defeating Behavior
Number 1: The Return Chaser
Number 2: The Overconfident Gambler
Number 3: The “Too Conservative” Investor
Notes
24 Introduction to Behavioral Investor Types
Introduction
Introduction: Personality Type Theories
The Behavioral Investor Type (BIT) Framework
What Is My Behavioral Investor Type?
Step 1: BIT Orientation Quiz
BIT #1: Preserver Behavioral Investor Type
BIT #2: Follower Behavioral Investor Type
BIT #3: Independent Behavioral Investor Type
BIT #4: Accumulator Behavioral Investor Type
Step 2: Bias Identification Quiz
Step 3: Advice for Each BIT
Summary
25 Preserver Behavioral Investor Type
Upside/Downside Analysis
Bias Analysis of Preservers
Loss Aversion Bias. Bias Type: Emotional. Application to the Preserver BIT
Status Quo Bias. Bias Type: Emotional. Application of Status Quo Bias to the Preserver BIT
Additional Biases of Preserver BIT: Endowment Bias, Mental Accounting, Anchoring
Endowment Bias. Bias Type: Emotional
Regret Aversion Bias. Bias Type: Emotional
Anchoring Bias. Bias Type: Cognitive
Mental Accounting Bias. Bias Type: Cognitive
Advice for Preservers
26 Follower Behavioral Investor Type
Upside/Downside Analysis
Bias Analysis of Followers
Recency Bias. Bias Type: Cognitive. Application to Preserver BIT
Example—Recency Bias
Framing Bias. Bias Type: Cognitive. Application of Framing Bias to Follower BIT
Other Important Follower Biases: Hindsight, Cognitive Dissonance, and Regret
Hindsight Bias. Bias Type: Cognitive
Cognitive Dissonance Bias. Bias Type: Cognitive
Regret Aversion Bias. Bias Type: Emotional
Advice for Followers
27 Independent Behavioral Investor Type
Upside/Downside Analysis
Bias Analysis of Independents
Confirmation Bias. Bias Type: Cognitive. Application to Independent BIT
Availability Bias. Bias Type: Cognitive. Application to Independent BIT
Evaluation
Self-Attribution. Bias Type: Cognitive
Conservatism Bias. Bias Type: Cognitive
Representative Bias. Bias Type: Cognitive
Advice for Independents
28 Accumulator Behavioral Investor Type
Upside/Downside Analysis
Accumulator Bias Analysis
Overconfidence Bias. Bias Type: Emotional. Application of Overconfidence Bias to Accumulator BIT
Illusion of Control. Bias Type: Cognitive. Application of Illusion of Control Bias to Accumulator BIT
Test Results Analysis
Affinity Bias. Bias Type: Emotional
Self-Control Bias. Bias Type: Emotional
Outcome Bias. Bias Type: Emotional
Advice for Accumulators
29 Asset Allocation Case Studies for Each Behavioral Investor Type
CASE STUDY #1
Case Study #1: Analysis
Case Study: Answers to Questions
CASE STUDY #2
Case Study #2: Analysis
Case Study: Answers to Questions
CASE STUDY #3
Case Study #3: Analysis
Case Study: Answers to Questions
CASE STUDY #4
Case Study #4: Analysis
Case Study: Answers to Questions
Case Study Summary and Conclusion
PART VI BEHAVIORAL ASPECTS OF PORTFOLIO IMPLEMENTATION
30 Behavioral Finance Aspects of the Active versus Passive Debate
The Logic of Passive Management
The Potential Benefits of Active Management
Consider the Following
Limitations of Risk Tolerance Questionnaires
Advice: Use the Best Practical Allocation for Your Portfolio
Notes
31 Behaviorally Aware Portfolio Construction
Introduction. The Behavioral Finance Approach to Asset Allocation Based on Mental Accounting
Goals-Based Investing
Consolidating Accounts into a Portfolio View
Portfolio Approach
32 Behavioral Finance and Market Corrections
The Most Recent Panic
Why Investors Panic: A Macroeconomic Behavioral Perspective
Explaining Individual Investor Decision Making During Market Meltdowns: Loss and Regret Aversion
Keeping Things in Perspective: Epidemics and Stock Market Performance
Market Recovery
Conclusion
Note
Index
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