Download or read book The Impact of Psychological Factors on Investment Decision Making of Investors written by Yamini Gupta and published by . This book was released on 2016 with total page 13 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the traditional financial theory, the decision makers were assumed to be rational and stock markets were thought out to be the perfect markets i.e. whatever information is available in the market is fully reflected in share prices and nobody can earn extra profits just by having insider's information. On the contrary, modern theory proposes that investors' decision-making is not always propelled by these thoughts. In fact, the decisions taken by them are unpredictable sometimes. Moreover, there are many studies which have shown that investors' decisions are influenced by numerous psychological factors. The present research aims at determining the various psychological factors that have an influence on investor's decision making in Indian stock market. In the present article, data was collected from 380 retail investors who are further segregated in two groups on the basis of their investment experience. Four behavioral biases namely loss aversion bias, regret aversion bias, herding bias and anchoring bias are considered and analysed using discriminant analysis and chi-square test. It was found that herding bias was exhibited by both the groups in an equally likely manner. Further, experienced investors were found to be more prone to loss aversion bias, regret aversion bias and anchoring bias as compared to that of less experienced investors.

Download or read book Psychological Factors and Investment Decision Making written by Ahmed Imran Hunjra and published by . This book was released on 2018 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the current days, behavioral finance, a new financial sub discipline has ignited a wave in explaining the investment decisions behavioral aspects and is becoming a necessary part of the decision making process because of its great impact on decision making behavior of investors'. The current study aim is to check the questionnaire validity which is used to measure the main determinants of decision-making of investment such as Propensity of Risk, Framing of Problem, Information Asymmetry, and Perception of Risk. 100 investors from Islamabad Stock Exchange depending upon their expert opinion were requested to rate the 39 items initial scale. By using AMOS version 16, after applying confirmatory factor analysis, the instrument of twenty two items is finalized. Future research may be conducted to test the model by using the data collected by this refined instrument in Pakistani Scenario.

Download or read book Impact of Investment Decisions on Retail Investors written by Suyam Praba and published by Meem Publishers. This book was released on 2023-07-21 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Delves into the realm of financial psychology, focusing on the investment choices made by retail investors and the subsequent effects on their investment patterns. The research aims to explore the behavioral aspects that influence decision-making in the realm of investments and how these choices shape the overall investment strategies adopted by individual retail investors. It utilizes a comprehensive research framework to analyze the various psychological factors, cognitive biases, and emotional responses that drive investment decisions among retail investors. By examining these behavioral aspects, the researchers aim to uncover the underlying reasons behind specific investment patterns and their outcomes. Through a combination of surveys, interviews, and data analysis, the study seeks to provide valuable insights into the motivations, risk tolerance, and decision-making processes of retail investors. Additionally, it aims to identify common behavioral biases that might lead to suboptimal investment choices, thereby contributing to the body of knowledge in both finance and psychology. Ultimately, the research endeavors to offer recommendations and strategies to enhance the investment decision-making process of retail investors. By understanding the impact of psychological factors on investment behavior, the study aims to empower individual investors to make more informed and rational choices, ultimately improving their financial outcomes and overall investment performance. This study is a valuable contribution to the field of behavioral finance, bridging the gap between psychological insights and investment practices in the context of retail investors.

Download or read book Relationship Between Psychological Factors and Investment Decision Making written by Lubna Riaz and published by . This book was released on 2018 with total page 14 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this study is to examine the role of various psychological factors which affect investment decision of Pakistani investors. A study model has been developed to describe the impact of risk propensity, asymmetric information, and problem framing on investor's behavior while making decisions through mediating role of risk perception. It also determines how much weight is attached to each independent variable by the investors when they make their decisions. The data for this study has been collected through an adapted questionnaire to determine the relationships between our variables. Structural Equation Modeling has been employed to determine the relationships among the variables. The findings and overall discussion concludes that the investor's behavior depends on how the available information is being presented to them and how much they are prone to taking risk while making decisions; thus playing a significant role in determining the investment style of an investor.

Download or read book The Role of Psychological Factors in the Investment Decision Making Process written by Aliaksandra [Verfasser] Harokhava and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: According to the conventional financial theory, market participants are rational wealth maximizers, and there is no room for emotions and subjectivity in the decision-making process. However, one can find many examples of the irrational behaviour, something that conventional finance has difficulties explaining. The study examines the investment decision-making process guided by the concepts of psychology in order to find out to what extent psychological factors play a role in the investment decision-making process, and how these factors differ depending on the group of decision-makers. In order to address the research questions, a review of theoretical and empirical work in this field as well as the qualitative research through the interviews were made. The results suggest that different groups of investors do tend to demonstrate a number of psychological biases and preferences as well as certain heuristics in their decision-making process. These biases lead to a number of market anomalies and also cause M&A failures. The effects of the psychological biases differ not only depending on the group of investment decision-makers but also on the organizational setting of the firm, imposed decision-making standards, experience and wealth level of the decision-makers as well as their personal qualities and values.*****According to the conventional financial theory, market participants are rational wealth maximizers, and there is no room for emotions and subjectivity in the decision-making process. However, one can find many examples of the irrational behaviour, something that conventional finance has difficulties explaining. The study examines the investment decision-making process guided by the concepts of psychology in order to find out to what extent psychological factors play a role in the investment decision-making process, and how these factors differ depending on the group of decision-makers. In order to address the research questions, a review of theoretical and empirical work in this field as well as the qualitative research through the interviews were made. The results suggest that different groups of investors do tend to demonstrate a number of psychological biases and preferences as well as certain heuristics in their decision-making process. These biases lead to a number of market anomalies and also cause M&A failures. The effects of the psychological biases differ not only depending on the group of investment decision-makers but also on the organizational setting of the firm, imposed decision-making standards, experience and wealth level of the decision-makers as well as their personal qualities and values.

Download or read book Investor Behavior written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2014-02-10 with total page 645 pages. Available in PDF, EPUB and Kindle. Book excerpt: WINNER, Business: Personal Finance/Investing, 2015 USA Best Book Awards FINALIST, Business: Reference, 2015 USA Best Book Awards Investor Behavior provides readers with a comprehensive understanding and the latest research in the area of behavioral finance and investor decision making. Blending contributions from noted academics and experienced practitioners, this 30-chapter book will provide investment professionals with insights on how to understand and manage client behavior; a framework for interpreting financial market activity; and an in-depth understanding of this important new field of investment research. The book should also be of interest to academics, investors, and students. The book will cover the major principles of investor psychology, including heuristics, bounded rationality, regret theory, mental accounting, framing, prospect theory, and loss aversion. Specific sections of the book will delve into the role of personality traits, financial therapy, retirement planning, financial coaching, and emotions in investment decisions. Other topics covered include risk perception and tolerance, asset allocation decisions under inertia and inattention bias; evidenced based financial planning, motivation and satisfaction, behavioral investment management, and neurofinance. Contributions will delve into the behavioral underpinnings of various trading and investment topics including trader psychology, stock momentum, earnings surprises, and anomalies. The final chapters of the book examine new research on socially responsible investing, mutual funds, and real estate investing from a behavioral perspective. Empirical evidence and current literature about each type of investment issue are featured. Cited research studies are presented in a straightforward manner focusing on the comprehension of study findings, rather than on the details of mathematical frameworks.

Download or read book BEHAVIORAL INVESTOR written by DANIEL. CROSBY and published by Jaico Publishing House. This book was released on 2019-01-01 with total page 313 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Art and science of investment management The behavior investor aims to enrich readers in the most holistic sense of the word, leaving them with tools for compounding both wealth and knowledge. Wealth, truly considered, has at least as much to do with psychological as financial wellbeing. In the behavior investor, psychologist and asset manager Daniel crosby examines the sociological, neurological and psychological factors that influence our investment decisions and sets forth practical solutions for improving both returns and behavior. Readers will be treated to the most comprehensive examination of investor behavior to date and will leave with concrete solutions for refining decision-making processes, increasing self-awareness and constraining the fatal flaws to which most investors are prone.

Download or read book The Psychology of Investing written by John R. Nofsinger and published by Routledge. This book was released on 2016-07 with total page 161 pages. Available in PDF, EPUB and Kindle. Book excerpt: A supplement for undergraduate and graduate Investments courses. See the decision-making process behind investments. The Psychology of Investing is the first text of its kind to delve into the fascinating subject of how psychology affects investing. Its unique coverage describes how investors actually behave, the reasons and causes of that behavior, why the behavior hurts their wealth, and what they can do about it. Features: What really moves the market: Understanding the psychological aspects. Traditional finance texts focus on developing the tools that investors use for calculating risk and return. The Psychology of Investing is one of the first texts to delve into how psychology affects investing rather than solely focusing on traditional financial theory. This text’s material, however, does not replace traditional investment textbooks but complements them, helping students become better informed investors who understand what motivates the market. Keep learning consistent: Most of the chapters are organized in a similar succession. This approach adheres to following order: -A psychological bias is described and illustrated with everyday behavior -The effect of the bias on investment decisions is explained -Academic studies are used to show why investors need to remedy the problem Growing with the subject matter: Current and fresh information. Because data on investor psychology is rapidly increasing, the fifth edition contains many new additions to keep students up-to-date. The new Chapter 12: Psychology in the Mortgage Crisis describes the psychology involved in the mortgage industry and ensuing financial crisis. New sections and sub-sections include “Buying Back Stock Previously Sold”, “Who Is Overconfident,” "Nature or Nurture?”, "Preferred Risk Habitat," "Market Impacts," "Language," and “Reference Point Adaptation.”

Download or read book Behavioural Investing written by Pauline Yong and published by Trafford Publishing. This book was released on 2013-07-16 with total page 93 pages. Available in PDF, EPUB and Kindle. Book excerpt: What drives investor behaviour? We would all like to think we always behave rationally but in reality we are often swayed by emotions. Most financial theories are based on the idea that everyone takes careful account of all available information before making investment decisions. However, researchers have uncovered a surprisingly large amount of evidence that this is not the case. Dozens of examples of irrational behaviour and repeated errors in judgement have been documented in academic studies. This book gives plenty of examples of investment mistakes, and analyses them from a Behavioural Finance perspective. Behavioural Finance is the study of the influence of psychology on the behaviour of investors and their subsequent effect on the markets. It combines the discipline of psychology and economics to explain why and how people make irrational or illogical decisions when they make investment decisions.

Download or read book Determining the Factors Affecting Individual Investors Behaviours written by Sevilay USLU DİVANOĞLU and published by . This book was released on 2019 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: Behavioral finance is precisely non-rational behavior of market investors. Behavioral finance theory shows that investors make investment decisions rationally, by intermittent change from the past and that investment decisions can be taken under the influence of some psychological factors. This theory shows how human behaviors are effective in the functioning of investment decisions and that investment decisions can be made in nonrational behaviors. People are determined to invest under the influence of emotions and personal intuitions with models based on rational behavior and investment behaviors. Whether individuals are rational in the economic decision-making process is one of the key points of debate and it seems quite complex to be able to demonstrate this. This study will focus on individuals (investors), one of the economic decision makers. Socio-economic factors, as well as psychological factors, influence the risk that investors perceive in the decision-making process of individual investors. The purpose of this study is to identify stimuli that affect individual investors' drivers of financial investment decisions and to consider it in terms of behavioral finance. For this purpose, an individual investor questionnaire has been determined in the field which has previously been validated and reliable. This questionnaire was applied to 200 employees working in private and public banks operating in Aksaray and 177 people were provided feedback. In the case of Aksaray, it has been determined which stimulants are under the influence of predictions, estimates, emotions, personal intuitions, psychological and sociological behaviors of investment decision-making individuals.

Download or read book Investing Psychology Website written by Tim Richards and published by John Wiley & Sons. This book was released on 2014-04-21 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discover how to remove behavioral bias from your investment decisions For many financial professionals and individual investors, behavioral bias is the largest single factor behind poor investment decisions. The same instincts that our brains employ to keep us alive all too often work against us in the world of finance and investments. Investing Psychology + Website explores several different types of behavioral bias, which pulls back the curtain on any illusions you have about yourself and your investing abilities. This practical investment guide explains that conventional financial wisdom is often nothing more than myth, and provides a detailed roadmap for overcoming behavioral bias. Offers an overview of how our brain perceives realities of the financial world at large and how human nature impacts even our most basic financial decisions Explores several different types of behavioral bias, which pulls back the curtain on any illusions you have about yourself and your investing abilities Provides real-world advice, including: Don't compete with institutions, always track your results, and don't trade when you're emotional, tired, or hungry Investing Psychology is a unique book that shows readers how to dig deeper and persistently question everything in the financial world around them, including the incorrect investment decisions that human nature all too often compels us to make.

Download or read book Financial Risk Tolerance A Psychometric Review written by John E. Grable and published by CFA Institute Research Foundation. This book was released on 2017-06-30 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt: This content provides financial analysts, investment professionals, and financial planners with a review of how financial risk-tolerance tests can and should be evaluated. It begins by clarifying terms related to risk taking and is followed by a broad overview of two important measurement terms: validity and reliability. It concludes with examples for practice.

Download or read book THE INFLUENCE OF BEHAVIORAL FACTORS IN MAKING DECISION AMONG INVESTORS IN KLANG VALLEY written by LEE JIA WEN (TP041343) and published by . This book was released on 2019 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: Extreme volatility has plagued financial markets worldwide since the 2008 Global Crisis. Investor sentiment has been one of the key determinants of market movements. In this context, studying the influence of behavioural factors in making investment decision among investors seemed important. Behavioural finance is an evolving field that studies how psychological factors affect decision making under uncertainty. This thesis seeks to find the influence of certain identified behavioural finance concepts, namely, heuristic bias, herding behaviour and prospect factor on the decision-making process of individual investor in Klang Valley, Malaysia. This was a quantitative research and using questionnaire method. Primary data for analysis was gathered by distributing a structured questionnaire among investors. Result obtained by analysing a sample of 160 respondents. The finding revealed that overconfidence and anchoring bias of heuristic bias, trade volume of herding behaviour and regret aversion of prospect factor has a significant impact on investment decision of investor in Klang Valley.

Download or read book BEHAVIORAL FINANCE written by Gregor Kaufmann and published by . This book was released on 2020-10-24 with total page 84 pages. Available in PDF, EPUB and Kindle. Book excerpt: Behavioral finance, a sub-field of behavioral economics, proposes that psychological influences and biases affect the financial behaviors of investors and financial practitioners. Moreover, influences and biases can be the source for an explanation of all types of market anomalies and specifically market anomalies in the stock market, such as severe rises or falls in stock price. Behavioral finance can be analyzed from a variety of perspectives. Stock market returns are one area of finance where psychological behaviors are often assumed to influence market outcomes and returns but there are also many different angles for observation. The purpose of the classification of behavioral finance is to help understand why people make certain financial choices and how those choices can affect markets. Within behavioral finance, it is assumed that financial participants are not perfectly rational and self-controlled but rather psychologically influential with somewhat normal and self-controlling tendencies. One of the key aspects of behavioral finance studies is the influence of biases. Biases can occur for a variety of reasons. Biases can usually be classified into one of five key concepts. Understanding and classifying different types of behavioral finance biases can be very important when narrowing in on the study or analysis of industry or sector outcomes and results. The efficient markey hypotesis (EMH) says that at any given time in a highly liquid market, stock prices are efficiently valued to reflect all the available information. However, many studies have documented long-term historical phenomena in securities markets that contradict the efficient market hypothesis and cannot be captured plausibly in models based on perfect investor rationality. The EMH is generally based on the belief that market participants view stock prices rationally based on all current and future intrinsic and external factors. When studying the stock market, behavioral finance takes the view that markets are not fully efficient. This allows for observation of how psychological factors can influence the buying and selling of stocks. The understanding and usage of behavioral finance biases are applied to stock and other trading market movements daily. Broadly, behavioral finance theories have also been used to provide clearer explanations of substantial market anomalies like bubbles and deep recessions. While not a part of EMH, investors and portfolio managers have a vested interest in understanding behavioral finance trends. These trends can be used to help analyze market price levels and fluctuations for speculation as well as decision-making purposes.

Download or read book A Study on Individual Investors Bias towards Investment Decision Making through the Concept of Neurofinance in NSIC Ltd written by Vara Lakshmi Thavva and published by GRIN Verlag. This book was released on 2021-08-09 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2020 in the subject Business economics - Investment and Finance, grade: 9.0, , course: MBA, language: English, abstract: The objectives of the study are to determine the psychological factors which play an important role behind the individual investors’ bias, in order to understand the influences of the individual investors’ bias, which can help the individual investors to avoid pitfalls while making investment decisions, and to create a literature on the research field of neurofinance. Investors’ bias plays an important role in investment decision making because the bias is the combination of emotional and psychological factors which make the investor not to rely on the available information which certainly leads the investor to the irrational manner towards the investment decision making. Finance also looks at the investors and notes that they are not behaving according to the theories like prospect theory. A new trend in the finance, which is certainly in an embryonic stage and is termed as“Neurofinance”. Neurofinance is the mixture of finance, psychology and neurosciences. Neurofinance uses the insights of psychology such as knowledge about the bias to understand and possibly correct mistakes committed by the individual investor towards their investment decision making. It tries to make sense of the facts on the investors’ bias towards investment decision making which indeed makes them behave irrational towards investment decision making.

Download or read book 50 Psychological Experiments for Investors written by Mickäel Mangot and published by John Wiley & Sons. This book was released on 2012-11-26 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: Great book! Mickäel has done a great job of explaining the insights from over 50 groundbreaking psychological experiments. You will learn how to avoid many of the psychological mistakes made by most investors. He teaches you to watch out for overconfidence and the momentum bias to avoid large losses. He helps you to understand how your social relationships can change your asset allocation risk profile. Forearmed is forewarned. If you apply Mickäel’s insights, you will improve your investment performance. Paul Stefansson Executive Director, UBS AG Why are investors sometimes their own worst enemies? As this eminently readable book shows, all sorts of biases affect investors’ judgments, ranging from sheer ignorance and emotions to overconfidence or aversions, from selected short-term memory to undue generalizations. Building on the expanding literature in behavioral economics, the experiments reported here shed a useful, often funny, light on the implicit rules investors use to form their judgment and decisions. This book will definitely help you make wiser investment decisions! Christian Koenig Director, Asian Center, ESSEC Business School Mickäel Mangot provides a fantastic tool that individuals as well as financial advisors can immediately apply to their portfolios. This book’s success lies in its superbly easy-to-use format: Mangot demystifies the technical terminology of behavioral finance by linking everyday behavior to the world of investing. So while the human examples are enjoyable and interesting (you’ll chuckle when you recognize these traits in yourself), he deftly explains how these very human biases lie at the root of 57 simple but very damaging investment mistakes. Most importantly, each conclusion provides a concise, sensible summary to help you correct—and improve—your investment decisions. Philippa Huckle CEO, The Philippa Huckle Group This is an insightful book that forces one to question one’s own financial behavior. 50 Psychological Experiments for Investors covers different topics such as savings, equity investment and property investment. The portrait of the investor presented here is harsh but can be highly profitable for anyone who recognizes that he or she is vulnerable to misjudgments and misguided emotions. A must-read for any self-questioning investor. Jacques-Henri David Vice Chairman Global Banking, Deutsche Bank

Download or read book The Psychology of Investing written by Lawrence E. Lifson and published by John Wiley & Sons. This book was released on 1999-03-25 with total page 218 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dieses maßgebende Buch aus der Schmiede der Harvard-Universität stützt sich auf Erkenntnisse und Ideen führender Experten aus den Bereichen Investment und Psychologie. Die Beiträge stammen u.a. von Abby Joseph Cohen, stellvertretender Vorstandsvorsitzender bei Goldman-Sachs, Samuel Hayes von der Harvard Business School und von Mark Hubert, Kolumnist beim Forbes Magazine. Diskutiert werden u.a. die psychologische Aspekte von Risiko, Massenpsychologie und geschlechtsbedingten Unterschieden im Investmentgeschäft. Mit einem Vorwort von John Train, dem Autor zahlreicher Bestseller zur Geldanlage. (11/97)