- Cover
- Title Page
- Copyright
- Dedication
- Preface
- Acknowledgments
- About the Author
- PART I: INTRODUCTION TO BEHAVIORAL FINANCE
- 1 What Is Behavioral Finance and Why Does It Matter?
- Why Behavioral Finance Matters
- Behavioral Finance: The Big Picture
- Standard Finance versus Behavioral Finance
- Notes
- 2 Introduction to Behavioral Biases
- Introduction
- Behavioral Biases Defined
- Why Understanding and Identifying Behavioral Biases Is Crucial
- Categorization of Behavioral Biases
- Differences between Cognitive and Emotional Biases
- Difference among Cognitive Biases
- Emotional Biases
- A Final Word on Biases
- PART II: BELIEF PERSEVERANCE BIASES DEFINED AND ILLUSTRATED
- 3 Belief Perseverance Bias #1: Cognitive Dissonance Bias
- Bias Description
- Am I Subject to Cognitive Dissonance Bias?
- Investment Advice
- Note
- 4 Belief Perseverance Bias #2: Conservatism Bias
- Bias Description
- Am I Subject to Conservatism Bias?
- Investment Advice
- Notes
- 5 Belief Perseverance Bias #3: Confirmation Bias
- Bias Description
- Am I Subject to Confirmation Bias?
- Investment Advice
- 6 Belief Perseverance Bias #4: Representativeness Bias
- Bias Description
- Examples of Representativeness Bias
- Am I Subject to Representativeness Bias?
- Investment Advice
- Note
- 7 Belief Perseverance Bias #5: Illusion-of-Control Bias
- Bias Description
- Example of Illusion of Control Bias
- Am I Subject to Illusion of Control Bias?
- Investment Advice
- Notes
- 8 Belief Perseverance Bias #6: Hindsight Bias
- Bias Description
- Example of Hindsight Bias
- Am I Subject to Hindsight Bias?
- Investment Advice
- PART III: INFORMATION PROCESSING BIASES DEFINED AND ILLUSTRATED
- 9 Information Processing Bias #1: Mental Accounting Bias
- Bias Description
- Practical Application
- Am I Subject to Mental Accounting Bias?
- Investment Advice
- Notes
- 10 Information Processing Bias #2: Anchoring Bias
- Bias Description
- Example of Anchoring and Bias
- Am I Subject to Anchoring Bias?
- Investment Advice
- Bonus Discussion: Investment Strategies That Leverage Anchoring Bias
- 11 Information Processing Bias #3: Framing Bias
- Bias Description
- Example of Framing Bias
- Am I Subject to Framing Bias?
- Investment Advice
- 12 Information Processing Bias #4: Availability Bias
- Bias Description
- Example of Availability Bias
- Am I Subject to Availability Bias?
- Investment Advice
- Notes
- 13 Information Processing Bias #5: Self-Attribution Bias
- Bias Description
- Example of Self-Attribution Bias
- Am I Subject to Self-Attribution Bias?
- Investment Advice
- Note
- 14 Information Processing Bias #6: Outcome Bias
- Bias Description
- Am I Subject to Recency Bias?
- Note
- 15 Information Processing Bias #7: Recency Bias
- Bias Description
- Example of Recency Bias
- Am I Subject to Recency Bias?
- Investment Advice
- PART IV: EMOTIONAL BIASES DEFINED AND ILLUSTRATED
- 16 Emotional Bias #1: Loss Aversion Bias
- Bias Description
- Example of Loss Aversion Bias
- Am I Subject to Loss Aversion Bias?
- Investment Advice
- Note
- 17 Emotional Bias #2: Overconfidence Bias
- Bias Description
- Examples of Overconfidence Bias
- Am I Subject to Overconfidence Bias?
- Investment Advice
- A Final Word on Overconfidence
- Notes
- 18 Emotional Bias #3: Self-Control Bias
- Bias Description
- Example of Self-Control Bias
- Am I Subject to Self-Control Bias?
- Investment Advice
- Note
- 19 Emotional Bias #4: Status Quo Bias
- Bias Description
- Example of Status Quo Bias
- Am I Subject to Status Quo Bias?
- Investment Advice
- Note
- 20 Emotional Bias #5: Endowment Bias
- Bias Description
- Example of Endowment Bias
- Am I Subject to Endowment Bias?
- Investment Advice
- Note
- 21 Emotional Bias #6: Regret Aversion Bias
- Bias Description
- Example of Regret Bias
- Am I Subject to Regret Bias?
- Advice
- 22 Emotional Bias #7: Affinity Bias
- Bias Description
- Example of Affinity Bias
- Am I Subject to Affinity Bias?
- Investment Advice
- Note
- PART V: BEHAVIORAL INVESTOR TYPES
- 23 Staying on Target to Reach Financial Goals Is Hard
- Non-Financial Examples of Self-Defeating Behavior
- Financial Examples of Self-Defeating Behavior
- Notes
- 24 Introduction to Behavioral Investor Types
- Introduction
- What Is My Behavioral Investor Type?
- Step 1: BIT Orientation Quiz
- Step 2: Bias Identification Quiz
- Step 3: Advice for Each BIT
- Summary
- 25 Preserver Behavioral Investor Type
- Upside/Downside Analysis
- Bias Analysis of Preservers
- Advice for Preservers
- 26 Follower Behavioral Investor Type
- Upside/Downside Analysis
- Bias Analysis of Followers
- Other Important Follower Biases: Hindsight, Cognitive Dissonance, and Regret
- Advice for Followers
- 27 Independent Behavioral Investor Type
- Upside/Downside Analysis
- Bias Analysis of Independents
- Self-Attribution
- Conservatism Bias
- Representative Bias
- Advice for Independents
- 28 Accumulator Behavioral Investor Type
- Upside/Downside Analysis
- Accumulator Bias Analysis
- Advice for Accumulators
- 29 Asset Allocation Case Studies for Each Behavioral Investor Type
- PART VI: BEHAVIORAL ASPECTS OF PORTFOLIO IMPLEMENTATION
- 30 Behavioral Finance Aspects of the Active versus Passive Debate
- The Logic of Passive Management
- The Potential Benefits of Active Management
- Advice: Use the Best Practical Allocation for Your Portfolio
- Notes
- 31 Behaviorally Aware Portfolio Construction
- Introduction
- Goals-Based Investing
- Consolidating Accounts into a Portfolio View
- Portfolio Approach
- 32 Behavioral Finance and Market Corrections
- The Most Recent Panic
- Note
- Index
- End User License Agreement
Acknowledgments
I would like to acknowledge all my colleagues and clients who have contributed to broadening my knowledge in behavioral finance and wealth management.
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