Behavioural Investing – A Practitioner′s Guide to Applying Behavioural Finance

<p>Preface xvii</p>
<p>Acknowledgments xxi</p>
<p>SECTION I: COMMON MISTAKES AND BASIC BIASES 1</p>
<p>1 Emotion, Neuroscience and Investing: Investors as Dopamine Addicts 3</p>
<p>2 Part Man, Part Monkey 17</p>
<p>3 Take aWalk on the Wild Side 37</p>
<p>4 Brain Damage, Addicts and Pigeons 47</p>
<p>5 What Do Secretaries Dustbins and the Da Vinci Code have in Common? 55</p>
<p>6 The Limits to Learning 63</p>
<p>SECTION II: THE PROFESSIONALS AND THE BIASES 77</p>
<p>7 Behaving Badly 79</p>
<p>SECTION III: THE SEVEN SINS OF FUND MANAGEMENT 95</p>
<p>8 A Behavioural Critique 97</p>
<p>9 The Folly of Forecasting: Ignore all Economists, Strategists, &amp; Analysts 105</p>
<p>10 What Value Analysts? 123</p>
<p>11 The Illusion of Knowledge or Is More Information Better Information? 133</p>
<p>12 WhyWaste Your Time Listening to Company Management? 143</p>
<p>13 Who′s a Pretty Boy Then? Or Beauty Contests, Rationality and Greater Fools 161</p>
<p>14 ADHD, Time Horizons and Underperformance 179</p>
<p>15 The Story is The Thing (or The Allure of Growth) 189</p>
<p>16 Scepticism is Rare or (Descartes vs Spinoza) 197</p>
<p>17 Are Two Heads Better Than One? 209</p>
<p>SECTION IV: INVESTMENT PROCESS AS BEHAVIOURAL DEFENCE 217</p>
<p>18 The Tao of Investing 219</p>
<p>PART A: THE BEHAVIORAL INVESTOR 223</p>
<p>19 Come Out of the Closet (or, Show Me the Alpha) 225</p>
<p>20 Strange Brew 235</p>
<p>21 Contrarian or Conformist? 247</p>
<p>22 Painting by Numbers: An Ode to Quant 259</p>
<p>23 The Perfect Value Investor 271</p>
<p>24 A Blast from the Past 279</p>
<p>25 Why Not Value? The Behavioural Stumbling Blocks 293</p>
<p>PART B: THE EMPIRICAL EVIDENCE: VALUE IN ALL ITS FORMS 305</p>
<p>26 Bargain Hunter (or It Offers Me Protection) 307<br /> Written with Rui Antunes</p>
<p>27 Better Value (or The Dean Was Right!) 329<br /> Written with Rui Antunes</p>
<p>28 The Little Note that Beats the Market 337<br /> Written with Sebastian Lancetti</p>
<p>29 Improving Returns Using Inside Information 355</p>
<p>30 Just a Little Patience: Part I 367</p>
<p>31 Just a Little Patience: Part II 375<br /> Written with Sebastian Lancetti</p>
<p>32 Sectors, Value and Momentum 387</p>
<p>33 Sector–Relative FactorsWorks Best 395<br /> Written with Andrew Lapthorne</p>
<p>34 Cheap Countries Outperform 405</p>
<p>PART C: RISK, BUT NOT AS WE KNOW IT 423</p>
<p>35 CAPM is CRAP (or, The Dead Parrot Lives!) 425</p>
<p>36 Risk Managers or Risk Maniacs? 437</p>
<p>37 Risk: Finance′s Favourite Four–Letter Word 445</p>
<p>SECTION V: BUBBLES AND BEHAVIOUR 453</p>
<p>38 The Anatomy of a Bubble 455</p>
<p>39 De–bubbling: Alpha Generation 469</p>
<p>40 Running with the Devil: A Cynical Bubble 493</p>
<p>41 Bubble Echoes: The Empirical Evidence 507</p>
<p>SECTION VI: INVESTMENT MYTH BUSTERS 519</p>
<p>42 Belief Bias and the Zen Investing 521</p>
<p>43 Dividends Do Matter 529</p>
<p>44 Dividends, Repurchases, Earnings and the Coming Slowdown 541</p>
<p>45 Return of the Robber Barons 549</p>
<p>46 The Purgatory of Low Returns 563</p>
<p>47 How Important is the Cycle? 573</p>
<p>48 Have We Really Learnt So Little? 581</p>
<p>49 Some Random Musings on Alternative Assets 587</p>
<p>SECTION VII: CORPORATE GOVERNANCE AND ETHICS 597</p>
<p>50 Abu Ghraib: Lesson from Behavioural Finance and for Corporate Governance 599</p>
<p>51 Doing the Right Thing or the Psychology of Ethics 611</p>
<p>52 Unintended Consequences and Choking under Pressure: The Psychology of Incentives 631</p>
<p>SECTION VIII: HAPPINESS 645</p>
<p>53 If It Makes You Happy 647</p>
<p>54 Materialism and the Pursuit of Happiness 655</p>
<p>References 667</p>
<p>Index 677</p>