Stocks for the Long Run : the Definitive Guide to Financial Market Returns and Long-term Investment Strategies

also a poor month in Australia and New Zealand, where the month marks the beginning of spring and longer days.^9 Perhaps the poo ...

Even more striking is the difference between stock returns in the first and second half of the month.^10 Over the entire 122-yea ...

of the world, Monday is a poor day, garnering negative returns not only in the United States but also in Canada, the United King ...

Monday is usually a bad day, traders sell the Friday before and buy back stock on Monday. Whatever the reason, it shows that, li ...

19 CHAPTER BEHAVIORAL FINANCE AND THE PSYCHOLOGY OF INVESTING The rational man—like the Loch Ness monster—is sighted often, but ...

This chapter is written as a narrative to make it easier to under- stand the basic research and issues of behavioral finance. Da ...

pays to trade on any news affecting stocks. Trust me, look how well we’re doing. TIME:JULY 2000 Jen:Dave, I’ve looked at our bro ...

thought you were going to monitor our investments closely. Our portfo- lio shows nothing but huge losses. Dave:I know; I feel te ...

model established them as the pioneers of behavioral finance, and their re- search has been making much headway in the finance p ...

Follow-up experiments confirmed that it was not social pressure that led the subjects to act against their own best judgment but ...

Dave, have you ever been in a new town and found yourself choos- ing between two restaurants? One perfectly rational way of deci ...

The problem is that most people are simply overconfidentin their own abilities. To put it another way, the average individual—wh ...

with computing power becoming so cheap.^16 Throw in a load of vari- ables to explain stock price movements and you are sure to f ...

to analyze the world in a particular way, and they sell their advice based on finding supporting—not contradictory—evidence.^17 ...

IC:Exactly. Often the reference point is the purchase price that investors pay for the stock. Investors become fixated on this r ...

It is hard for us to admit we’ve made a bad investment, and it is even harder for us to admit that mistake to others. But to be ...

Rules for Avoiding Behavioral Traps Dave:I don’t feel secure enough to trade again soon. I just want to learn the right longer-t ...

Myopic Loss Aversion, Portfolio Monitoring, and the Equity Risk Premium Dave:Because of how badly I was doing in the market, I e ...

omists have been trying to figure out why stocks have returned so much more than fixed-income investments. Studies show that ove ...

investors are unduly optimistic when stock prices are high and unduly pessimistic when they are low. This is not a new concept e ...