Description
Book SynopsisFinance for Normal People teaches behavioral finance to people like you and me - normal people, neither rational nor irrational. We are consumers, savers, investors, and managers - corporate managers, money managers, financial advisers, and all other financial professionals.The book guides us to know our wants - including hope for riches, protection from poverty, caring for family, sincere social responsibility and high social status. It teaches financial facts and human behavior, including making cognitive and emotional shortcuts and avoiding cognitive and emotional errors such as overconfidence, hindsight, exaggerated fear, and unrealistic hope. And it guides us to banish ignorance, gain knowledge, and increase the ratio of smart to foolish behavior on our way to what we want.These lessons of behavioral finance draw on what we know about us - normal people - including our wants, cognition, and emotions. And they draw on the roles of these factors in saving and spending, portfolio con
Trade ReviewAs Pogo used to say: 'We have met the enemy and we are it.' By elucidating clearly the teachings of behavioral finance, Meir Statman shows us how to avoid the common errors investors make and how to become smarter investors. * Burton G. Malkiel, author of A Random Walk Down Wall Street, 11th ed. Paper, 2016 *
Meir Statman describes investors as normal in this insightful book, not irrational as in earlier behavioral finance, and not rational wealth-maximizing caricatures as in typical textbooks. Normal investors underlie Statman's innovative approach to portfolios, saving and spending, asset pricing, and market efficiency. * Harry Markowitz, Winner, Nobel Prize in Economics, and Professor of Finance at the Rady School of Management *
Meir Statman, a leading light of behavioral finance, describes lucidly and vividly the cognitive and emotional errors underlying the maxim "If you don't know who you are, the stock market is an expensive place to find out." Readers of this behaviorally savvy book will be well prepared to avoid those errors. * Paul Slovic, Professor of Psychology, University of Oregon, and author of The Perception of Risk *
One of the pioneers of behavioral finance, Meir Statman has done a great service for investors, portfolio managers, and financial regulators with this insightful volume. If you've ever wondered why you sold too early or why you got in too late, you need to read this book! * Andrew Lo, Charles E. and Susan T. Harris Professor of Finance, MIT Sloan School of Management *
Yes, to be successful, we need to make good investments, but then we need to be good investors, exhibiting the virtues of simplicity, broad diversification, and low investment costs, and focusing on the long term. This fine book is welcome help. * John C. Bogle, founder of Vanguard and the first index mutual fund *
Table of ContentsIntroduction: What is Behavioral Finance? Part 1: Behavioral People are Normal People Chapter 1: Normal People Chapter 2: Our Wants for Utilitarian, Expressive, and Emotional Benefits Chapter 3: Cognitive Shortcuts and Errors Chapter 4: Emotional Shortcuts and Errors Chapter 5: Correcting Cognitive and Emotional Errors Chapter 6: Experienced Happiness, Life-Evaluation, and Choices: Expected Utility Theory and Prospect Theory Chapter 7: Behavioral Finance Puzzles: The Dividend Puzzle, the Disposition Puzzle, and the Puzzles of Dollar-Cost-Averaging and Time-Diversification Part 2: Behavioral Finance in Portfolios, Life-Cycles, Asset Prices, and Market Efficiency Chapter 8: Behavioral Portfolios Chapter 9: Behavioral Life-Cycles of Saving and Spending Chapter 10: Behavioral Asset Pricing Chapter 11: Behavioral Market Efficiency Chapter 12: Lessons of Behavioral Finance
