SCFT - Behavioral finance

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The Stan Clark Financial Team’s Perspectives on

Behavioral Finance

Key Readings

Behavioral finance explores the relationship between human psychology and financial decisions. Successful financial planning and investing often requires going against the crowd and against some of our most deeply rooted human emotions. Our approach and philosophy, built on the lessons of behavioral finance, help us do that.

As you read the story below, you’ll get an idea of what is wrong with most investment methods, how human psychology constantly leads us into making mistakes that cost us money and what you can do to avoid those mistakes in order to outperform long-term market averages. Read Stan’s story about investing and how it relates to Behavioral Finance

How emotions and biases affect our finances

One of the most fascinating things ever to happen in economics was when an ingenious psychologist, Dr. Daniel Kahneman, decided to study it. In 2002 he won the Nobel Prize in economics for “having integrated insights from psychological research into economic science, especially concerning human judgment and decision-making under uncertainty.” Kahneman actually created a new discipline, Behavioral Finance. Learn more

Perspectives articles by topic

Written by Stan Clark

Our articles on behavioural finance

Our natural human addiction to prediction Read / Watch / Transcript

Fooled by randomness Read / Watch

Investors, be wary: Our intuitions don't have a feel for probabilities Read

Trust your instruments over your senses Read

Lake Wobegon, where all investors are above average Read / Watch / Transcript

More information increases confidence – but what about accuracy? Read / Watch / Transcript

Avoid confirmation bias – be open to contrary evidence Read

Confirmation bias is normal – but dangerous for investors Read

Anchoring: When to hold on – and when to cut free Read

How the framing phenomenon affects your key financial decisions Read

The siren song of stories Read

Don't let the investment herd trample you! Read

How to avoid fear-based ‘herd' behaviour Read

How hindsight can hurt your foresight Read

How the news can hurt your investment decisions Read

Mere-Exposure Effect: How familiarity affects your financial decisions Read

CAUTION: Biases won't disappear just because we know about them Read

Learn from Ulysses to improve your investing Read

Five tools to avoid the pitfalls of Financial Sirens Read

Thinking: We're of two minds about it Read

Be wary of the words "This time it's different" Read

The Restraint Bias: How much control do you really have? Read

The Money Illusion: How inflation threatens what today's money can buy in the future Read

The Cluster Illusion – Seeing trends where there are none Read

How rational are you? Read

Trust your intuition? Sometimes – but not for picking stocks Read / Watch / Transcript

Beware of ‘cognitive dissonance':It undermines facts, leads to poor investing decisions Read / Watch / Transcript

Can professional managers be fooled by ‘herd behaviour'? Read / Watch / Transcript

Luck and the illusion of stock-picking skill Read / Watch / Transcript

The planning fallacy: How optimism can lead to poor investment decisions Read

How loss aversion and the endowment effect influence your financial decisions Read / Watch / Transcript

What behavioral finance tells us about making judgments – even expert ones Read / Watch / Transcript

Superforecasting: The Art and Science of Prediction Read / Watch / Transcript

Superforecasting: What makes good forecasters different? (Part 2) Read / Watch / Transcript

Superforecasting: Philip Tetlock's first five commandments (Part 3) Read

Superforecasting: Tetlock's next six commandments (Part 4) Read

Superforecasting: Summary (Part 5) Read

The rider or the elephant: Who is really in control? Read

The oldest and strongest emotion – fear Read

Another Nobel Prize for behavioral economics Read

The Undoing Project – a friendship that changed our minds Read

Introversion, extroversion and your finances Read

We're half way there: How to carry out your resolutions? Read

The future is better than you think Read

Careful: You likely suffer from exponential growth bias Read