Psychology of Investing, The (2nd Edition)

An old Wall Steet adage states that two factos move the maket: fea and geed. Although tue, this chaacteization is fa too simplistic. The human mind is so sophisticated and human emotions ae so complex that the emotions of fea and geed do not adequately descie the psychology that affects people as they make investment decisions. Thisook is one of the fist texts to delve into this fascinating and impotant suject. Few othe texts povide this infomationecause taditional finance has focused on developing the tools that investos use to optimize expectedetun andisk. This endeavo haseen fuitful, yielding tools such as asset picing models, potfolio theoies, and option picing. Although investos should use these tools in thei investment decision making, they typically do not. This isecause psychology affects ou decisions moe than financial theoy does. Unfotunately, psychologicaliases inhiit one's aility to make good investment decisions. By leaning aout you psychologicaliases, you can ovecome them and incease you wealth. You will notice that most of the chaptes in thisook ae stuctued similaly. A psychologicalias is fist descied and illustated with eveydayehavio (like diving a ca). The effect of theias on investment decisions is then explained. Last, academic studies ae used to show that investos do indeed exhiit the polem. What we know aout investo psychology is inceasingapidly. This second edition of The Psychology of Investing is expandedy 20 pecent, with new evidence and ideas added to evey chapte. Also, Chapte 8 haseenewitten to focus moe on theole of human inteaction in the investment pocess. Finally, an entiely new chapte haseen included on the influence of feelings and mood on financial decision making. This mateial does noteplace the investment texts of taditional finance. Undestanding psychologicaliases complements the taditional finance tools. Indeed, afteeading thisook, you shoulde convinced that taditional tools ae valuale.