Analysis of investment strategy analysis
Summary of the 1980s the rise of behavioral finance theory of human psychology and behavior caused by bad investments and market differences as in the analysis of investor psychology, behavioral characteristics based on the investment strategies discussed.
Keywords
behavioral
finance
theory,
investment strategy investment psychology An overview of behavioral finance Traditional financial theory is based on market participants are rational, based on the assumption that people in this basis, the core of the traditional finance is the name of the efficient market hypothesis (EMH). The hypothesis that the relevant information if not distorted and in fully reflected in securities prices, the market is efficient. According to this hypothesis, developed a variety of financial theories, including modern portfolio theory (MPT), the capital asset pricing theory (CAPM), arbitrage pricing theory (APT ), option pricing theory (OPT) and so together constitute the foundation of modern financial theory, but also constitute
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the modern theoretical basis for securities investment strategy. However, with the continuous development of the financial securities market, the traditional finance theory and financial securities markets continue to occur with the reality of conflict, a large number of empirical studies have found that people’s behavior, the subjective feelings of psychological factors in the financial investment plays a significant role in People do not always make decisions in a rational manner in reality there are many cognitive biases and not entirely rational phenomenon, securities investment behavior will show a variety of extreme and emotional characteristics; is manifested in the stock market the stock prices of ‘vision’, such as: January effect, the weekend (Monday) effect, etc., is difficult to use traditional financial theory, these ‘visions’ give a reasonable explanation in this case, from the 1950s of behavioral finance is taken seriously, it is from a new perspective to analyze the financial markets, to overcome some of the drawbacks of traditional finance.
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behavioral finance investment
decision-making psychology, behavioral characteristics 2.1 Overconfidence (Over-confidence) De Bondet and Thaler (1995) that overconfidence may be the most stable human psychological characteristics, they cite a lot of evidence that people make decisions, uncertain events of time to estimate the probability of occurrence of over-confidence. Money managers, investment advisers and investors of the ability to control the market may have their
own
over-confidence
in
the
investment
decision-making skills and overestimate their successful trend forecasting or over-reliance on their own information while ignoring the company fundamentals, resulting in the possibility of making mistakes. This overconfidence may lead to a large number of completely over-trading (over trad? Juan ed) generation.
2.2 overreaction (Over-reaction) Depicts is that investors overreact to understand and respond to information will appear on irrational bias, resulting in weigh heavy on information, the phenomenon of radical behavior. Mainly in speculative asset market prices deviate from their fundamental value will always be . Another
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manifestation of over-reaction, when no need to take some action to the fact that, investors because of the subjective misjudgment, that fact has occurred and to take action and lead to investment losses.
2.3 insufficient response (Under-reaction) When a major news release on the market, the stock price volatility is usually no, but in the absence of any news, but sometimes the stock market volatility and a significant reduction in abnormal, indicating that the lagging stock price reaction to information with the individual investors overreact to new information is often the opposite is, professional investors and securities analysts more performance for less than reproduction, they are usually because of over-reliance on past historical experience as a judge of the frame of reference, and the emergence of new market trends and changes in response to slow, and thus missed profit opportunities.
2.4 Non-Bayesian expected Behavioral finance
theory
holds
that
people
in
specific
decision-making process, not according to traditional
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financial theory Bayesian rule is expected to continue to invest in the probability of correct, but the recent events and the latest experience to give more weight in decision-making and pay more attention to the choice of recent events.
2.5 regret aversion (Myopic Loss Aversion) Investors find themselves made the wrong judgments, the often sad and painful, and in order to avoid this pain, non-rational investors will change their behavior. ‘Loss aversion (Loss Aversion)’ is the regret aversion direct cause, precisely because the pain caused by the loss that makes people feel sorry if some decision-making can reduce the investor’s regret psychology of investors, this decision-making
will
be
better
than
other
decision-making, such as Many investors have a herd mentality, and actively sought to purchase the stock market, and once fell, investors take into account the large number of other investors also suffered a loss, guilt and unhappiness will be reduced accordingly.
2.6 solid anchor effect (Anchoring Effect) ..com
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Analysis of investment strategy analysis-毕业论文翻译
