Behavioral finance and wealth management: how to build optimal portfolios that account for investor biases

The book that applies behavioral finance to the real world Understanding how to use behavioral finance theory in investing is a hot topic these days. Nobellaureate 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 Pompiantakes 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 allocationdecisions. Offering investors and financial advisors a 'self-help' book, Pompian shows how to create investment strategies that leverage the latest cuttingedge 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 approachesfor 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 longterm 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 results This Second Editionillustrates 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. INDICE: Preface Part One: Introduction to Behavioral Finance Chapter 1: What Is Behavioral Finance? Behavioral Finance: The Big Picture Standard Financeversus Behavioral Finance The Role of Behavioral Finance with Private ClientsHow Practical Application of Behavioral Finance Can Create a Successful Advisory Relationship Notes Chapter 2: The History of Behavioral Finance Micro Historical Perspective on the Link between Psychology and Economics Modern Behavioral Finance Psychographic Models Used in Behavioral Finance References Notes Chapter 3: Introduction to Behavioral Biases Introduction Behavioral Biases Defined Why Understanding and Identifying Behavioral Biases is Important Categorization of Behavioral Biases Differences between Cognitive and Emotional BiasesDifference among Cognitive Biases Emotional Biases A Final Word on Biases Summary of Part One Notes Part Two: Belief Perseverance Biases Defined and Illustrated Chapter 4: Cognitive Dissonance Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Conclusion Notes Chapter 5: Conservatism Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Notes Chapter 6: Confirmation Bias Bias Description PracticalApplication Research Review Diagnostic Testing Advice Notes Chapter 7: Representativeness Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Notes Chapter 8: Illusion of Control Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Final Thought Notes Chapter 9: Hindsight Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Notes Part Three: Information Processing Biases Defined and Illustrated Chapter 10: Mental Accounting Bias Bias Description Practical Application Research Review Diagnostic Testing Advice The Behavioral Finance Approach to Asset Allocation based on Mental Accounting Notes Chapter 11: Anchoring and Adjustment Bias Bias Description Practical ApplicationResearch Review Diagnostic Testing Advice Bonus Discussion: Investment Strategies That Leverage Anchoring and Adjustment Bias Notes Chapter 12: Framing Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Notes Chapter 13: Availability Bias Bias Description Practical Application Research Review Diagnostic Test Advice Notes Chapter 14: Self-Attribution Bias Bias Description Practical application Research Review Diagnostic testing Advice Notes Chapter 15: Outcome Bias Bias Description Diagnostic Notes Chapter16: Recency Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Notes Part Four: Emotional Biases Defined and IllustratedChapter 17: Loss Aversion Bias Bias Description Practical Application Research Review Diagnostic Testing Advice Notes Chapter 18: Overconfidence Bias Bias Description Practical Application Research Review Diagnostic Testing Advice A Final Word on Overconfidence Notes Chapter 19

• ISBN: 978-1-118-01432-5
• Editorial: John Wiley & Sons
• Encuadernacion: Cartoné
• Páginas: 352
• Fecha Publicación: 12/01/2012
• Nº Volúmenes: 1
• Idioma: Inglés