Title: Chapter 27: Trading and Investment Strategies in Behavioral Finance
Abstract: The chapter describes investment and trading strategies rooted in behavioral finance that historically have generated superior profits. The failure of traditional finance models, such as those based on purely rational behavior, to explain how markets work has enabled behavioral finance to move into the foreground among practitioners. Most investors are fraught with behavioral biases and their investment performance reflects this unfortunate fact. However, hope exists for those seeking to improve investment performance. Investment analysts will become akin to doctors analyzing the vast complexity of the human genome. An individual may be susceptible to a specific disease based on his or her genetic makeup, but something, such as an environmental trigger, must activate it. Similarly, successful investment analysts should examine not only the fundamental and technical aspects of securities but also the behavioral factors that ultimately influence their market prices.
Publication Year: 2014
Publication Date: 2014-02-10
Language: en
Type: article
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