Investment Psychology (2nd Edition)

Author: (USA) John Nor cens ing Liu Fengyuan Zhang Chun'an
Publisher:
Publishing Date: 2005-05-01
Features: Wall Street has an old saying, "The market is driven by two forces: greed and fear." This statement is not wrong, but it is too simplistic. Human thoughts and emotions are very complex, and the four words "greed and fear" cannot fully summarize the entire psychology that influences investment decisions. This book is a monograph that delves deeply into this fascinating and very important topic. Traditional finance focuses on analyzing the analytical tools investors use to optimize expected risk and return, so few textbooks cover the subject of investment psychology. Traditional finance has achieved significant results, developing analytical tools such as asset pricing models, portfolio theory, and option pricing theory. Investors should apply these analytical tools in their investment decision-making process, but they usually do not, because the influence of human psychology on investment decisions is far greater than that of these traditional financial theories. Unfortunately, psychological biases often affect people's ability to make correct investment decisions. By understanding psychological biases, people can overcome these biases and improve their wealth level.