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The Behavioral Investor

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The Behavioral Investor

Where the Mind Meets the Markets

CFA Institute,

5 min read
3 take-aways
Audio & text

What's inside?

Exploit your all-too-human foibles to make better investment decisions.


Editorial Rating

7

Qualities

  • Overview
  • Background
  • Concrete Examples

Recommendation

You can harness your behavioral idiosyncrasies to make better investment decisions, according to psychologist Daniel Crosby. In this CFA Institute podcast, he discusses financial decision-making behavior and covers the human tendencies that can lead to poor investment choices. But he also suggests ways to make those inclinations work for you. Crosby offers listeners simple, practical advice, including recommended readings, that would be helpful to both experienced financial advisers and investing beginners.

Summary

Behavioral predispositions affect people’s investment decisions.

Among the roughly 200 human cognitive biases that are related to decision making, four of them emerge as major themes in investing: “emotion, ego, attention and conservatism.” Emotion tends to overrule logic when you make decisions about money. Ego manifests as overconfidence when you believe that you’re better or brighter than average.

Attention can mislead you, because of a tendency to think that events that come readily to mind are more probable than they actually are. Conservatism...

About the Podcast

Daniel Crosby, a psychologist and behavioral finance expert, is the chief behavioral officer at Brinker Capital. The Take 15 Podcast presented by CFA Institute is a collection of illuminating, short conversations with noted economists, best-selling authors, leading researchers, and successful practitioners on topics ranging from geopolitics and whistleblowing to irrationality and outlooks. Download now, listen later, and reflect at length.


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