- Paperback: 128 pages
- Publisher: Prentice Hall; 2 edition (Mar 12 2004)
- Language: English
- ISBN-10: 0131432702
- ISBN-13: 978-0131432703
- Product Dimensions: 22.4 x 15 x 1 cm
- Shipping Weight: 181 g
- Average Customer Review: 3.0 out of 5 stars See all reviews (2 customer reviews)
- Amazon Bestsellers Rank: #119,711 in Books (See Top 100 in Books)
- See Complete Table of Contents
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Product Description
Book Description
For undergraduate and graduate Investments courses. The Psychology of Investing is the first text of its kind to delve into the fascinating subject of psychology affects investing. Its unique coverage describes how investors actually behave, the reasons and causes of that behavior, why the behavior hurts their wealth, and what they can do about it. Traditional finance has focused on developing the tools which investors can use to optimize expected return and risk-understanding the psychology of investing will complement the material covered in traditional investments text.
From the Inside Flap
An old Wall Street adage states that two factors move the market: fear and greed. Although true, this characterization is far too simplistic. The human mind is so sophisticated and human emotions are so complex that the emotions of fear and greed do not adequately describe the psychology that affects people as they make investment decisions. This book is one of the first texts to delve into this fascinating and important subject.
Few other texts provide this information because traditional finance has focused on developing the tools that investors use to optimize expected return and risk. This endeavor has been fruitful, yielding tools such as asset pricing models, portfolio theories, and option pricing. Although investors should use these tools in their investment decision making, they typically do not. This is because psychology affects our decisions more than financial theory does.
Unfortunately, psychological biases inhibit one's ability to make good investment decisions. By learning about your psychological biases, you can overcome them and increase your wealth. You will notice that most of the chapters in this book are structured similarly. A psychological bias is first described and illustrated with everyday behavior (like driving a car). The effect of the bias on investment decisions is then explained. Last, academic studies are used to show that investors do indeed exhibit the problem.
What we know about investor psychology is increasing rapidly. This second edition of The Psychology of Investing is expanded by 20 percent, with new evidence and ideas added to every chapter. Also, Chapter 8 has been rewritten to focus more on the role of human interaction in the investment process. Finally, an entirely new chapter has been included on the influence of feelings and mood on financial decision making.
This material does not replace the investment texts of traditional finance. Understanding psychological biases complements the traditional finance tools. Indeed, after reading this book, you should be convinced that traditional tools are valuable.
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Customer Reviews
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Most helpful customer reviews
1.0 out of 5 stars
interesting concepts, 10- year old-level writing,
By A Customer
This review is from: Psychology of Investing, The (Paperback)
insightful concepts, but it seems written by a 10 year old.
5.0 out of 5 stars
Great Book,
By A Customer
This review is from: Psychology of Investing, The (Paperback)
Most of the typical psychology of trading books just regurgitate the same 'ol same 'ol. This one hits all the bases with examples to back them up - and no fluff. I really appreciated how everything was condensed and to the point without having to read a lengthy discourse on each topic. That made it easy to digest the material and left me with a lot to think about. This was the best book I've read in it's class. Well worth reading.
Share your thoughts with other customers: Create your own review
Most Helpful Customer Reviews on Amazon.com (beta) Amazon.com:
4.2 out of 5 stars (12 customer reviews) 31 of 35 people found the following review helpful
5.0 out of 5 stars
Great Book,
By A Customer - Published on Amazon.com
This review is from: Psychology of Investing, The (Paperback)
Most of the typical psychology of trading books just regurgitate the same 'ol same 'ol. This one hits all the bases with examples to back them up - and no fluff. I really appreciated how everything was condensed and to the point without having to read a lengthy discourse on each topic. That made it easy to digest the material and left me with a lot to think about. This was the best book I've read in it's class. Well worth reading.
14 of 15 people found the following review helpful
5.0 out of 5 stars
Good summary of how behavior affects investing decisions,
By Anita - Published on Amazon.com
This review is from: The Psychology of Investing (Paperback)
This book contains a good summary of the different ways in which what we think affects investing decisions we make. I liked the fact that the book is short and to the point and does not use psychological jargon. I found it quite insightful and could identify with several of the traits and thought processes the book describes, I would recommend it to anyone who makes their own investment decisions
13 of 15 people found the following review helpful
5.0 out of 5 stars
A very good book that proves sometimes less is more.,
By H. P. Evans - Published on Amazon.com
This review is from: The Psychology of Investing (Paperback)
I really liked this book. Nofsinger makes a clear and concise case against the existence of a rational investing "homo economicus", a key assumption of modern portfolio theory. The book is well footnoted and a good place to start learning the underlying tenants of behavioral finance.
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