What Investors Really Want: Know What Drives Investor Behavior and Make Smarter Financial Decisions

by Statman, Meir

• ISBN13: 9780071741651
• ISBN10: 0071741658
• Edition: 1st
• Format: Hardcover
• Copyright: 2010-11-16
• Publisher: McGraw Hill

Summary

WHAT IN VESTORS WANT--HOW YOU CAN SUCCEED Praise forWhat Investors Really Want"We all share behavioral traits that are major roadblocks to intelligent financial decisions. Bottom line: if you really want to achieve investment success, understand yourself and eliminate or minimize these traits. This book will help you do exactly that." -- John C. Bogle, Founder, Vanguard Funds"What Investors Really Wantenables us to "post mortem" the financial decisions of ourselves and others. The book is extremely valuable for theory, as a survey of how the human animal makes financial decisions, and for the practice of making smarter financial decisions." --Harry M. Markowitz, Rady School of Management, University of California, San Diego; winner, Nobel Memorial Prize in Economic Sciences"In investing, we are often our own worst enemies. Meir Statman, an expert in behavioral finance, explains the common errors to which we are prone and helps us make smarter decisions about our investments." --Burton Malkiel, bestelling author ofA Random Walk Down Wall Street"A masterly review of the many pitfalls and challenges facing market participants today, written by one of the founders of the field of behavioral finance. This volume should be required reading for all investors and their financial advisors!" --Andrew W. Lo, Harris & Harris Group Professor of Finance at the MIT Sloan School of Management"What a gem! Meir Statman is a wise and engaging teacher, and after reading his book, I will be a wiser, better, less anxious investor." --Don Ezra, co-chair, global consulting, Russell Investments, and co-author ofPension Fund ExcellenceandThe Retirement Plan Solution"The first step to good investing is always the same, 'know thyself'. If you read this book and don't recognize a lot of yourself in it, you're just not paying attention!" --Cliff Asness, founding and managing principal, AQR Capital Management LLC"Meir Statman, a leading light of behavioral finance, shines the bright light of modern neuropsychology on all the mental demons that conspire to make you poor. He'll make you laugh, he'll make you cry and, best of all, he'll improve your bottom line." --William Bernstein, bestselling author ofThe Intelligent Asset Allocator, The Four Pillars of Investing, andThe Investor's Manifesto; co-founder, Efficient Frontier AdvisorsCombining the new field of behavioral finance with the real world of investing, this engaging new book explores the mind-sets and motivations behind the major money decisions--and most common mistakesthat investors make every day. With insider's insight, and a storyteller's voice, behavioral finance expert Meir Statman revealsWhat Investors Really Want. . . Investors want bigger profits with lower risks. How our desire for free investment lunches can leave us with nolunches Investors want to play and win. How our desire to win the investment game can turn us into losers Investors want to save money for tomorrow and spend it today. How we struggle between spending too much andspending too little Investors want status, respect, and social responsibility. How to know what's really important in life Investors do not want to face financial losses. How to recognize and confront the regret that accompanies lossesYou'll also learn how age, gender, genetics, and personality affect your investment decisions and how people of different countries and cultures think about risks and returns, poverty, and wealth. You'll discoverhow behavioral finance provides key insights into the behavior that has rocked investment markets in recent years. And, most important, you'll learn to recognize the desires, thoughts, and emotions that drive your own investment decisions--so you can drive better on your road to investment success.

Author Biography

Author Profile
Meir Statman is the Glenn Klimek Professor of Finance at the Leavey School of Business, Santa Clara University and Visiting Professor at Tilburg University in the Netherlands. His research focuses on behavioral finance. He attempts to understand how investors and managers make financial decisions and how these decisions are reflected in financial markets.

The questions he addresses include: What are the cognitive errors and emotions that influence investors? What are investor aspirations? How can financial advisors and plan sponsors help investors? What is the nature of risk and regret? How do investors form portfolios? How successful are tactical asset allocation and strategic asset allocation? What determines stock returns? What are the effects of sentiment? How successful are socially responsible investors?

Meir's research has been published in the , the Journal of Financial Economics, the Review of Financial Studies, the Journal of Financial and Quantitative Analysis, the Financial Analysts Journal, the Journal of Portfolio Management, and many other journals. The research has been supported by the National Science Foundation, the Research Foundation of the CFA Institute, and the Investment Management Consultants Association (IMCA). Meir is a member of the Editorial Board of the Financial Analysts Journal, the Advisory Board of the Journal of Portfolio Management, the Journal of Wealth Management and the Journal of Investment Consulting, an Associate Editor of the Journal of Financial Research, the Journal of Behavioral Finance, and the Journal of Investment Management and a recipient of a Batterymarch Fellowship, a William F. Sharpe Best Paper Award, a Bernstein Fabozzi/Jacobs Levy Outstanding Article Award, a Davis Ethics Award, a Moskowitz Prize for best paper on socially responsible investing, two Baker IMCA Journal Awards, and two Graham and Dodd Awards of Excellence. Meir consults with many investment companies and presents his work to academics and professionals in many forums in the U.S. and abroad.

Meir received his Ph.D. from Columbia University and his B.A. and M.B.A. from the Hebrew University of Jerusalem.

Table of Contents

Introduction: What We Want	p. ix
We Want Profits Higher than Risks	p. 1
We Have Thoughts, Some Erroneous	p. 17
We Have Emotions, Some Misleading	p. 37
We Want to Play, and Win	p. 55
We Join Herds and Inflate Bubbles	p. 67
We Want Self-Control and Mental Accounts	p. 81
We Want to Save for Tomorrow and Spend It Today	p. 93
We Want Hope for Riches and Freedom from the Fear of Poverty	p. 107
We Have Similar Wants and Different Ones	p. 119
We Want to Face No Losses	p. 133
We Want to Pay No Taxes	p. 151
We Want High Status and Proper Respect	p. 161
We Want to Stay True to Our Values	p. 177
We Want Fairness	p. 195
We Want to Invest in Our Children and Families	p. 209
We Want Education, Advice, and Protection	p. 223
Conclusion: What We Have	p. 237
Notes	p. 243
Index	p. 275
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