35 Quotes About Behavioral-finance

I began this process without preconceptions of how the information would shake out. Five consistent types of behavioral risk emerged: Ego, Emotion, Information, Attention, and Conservation. The number of bad decisions we can make is limitless (have you seen reality TV?), but all behavioral risk has one or more of these five risk factors at its core.

What I am proposing here is that you consistently bet on inconsistency. What I am asking you to do is bet unfailingly on the failures of human reason, which is a sure bet indeed. It is a painful thing to admit that education, intellect and willpower are inadequate to make you the type of investor you would like to be, but it’s not as painful as losing money.

Let me say with all forthrightness that the [Rule-Based Behavioral Investing] model is not perfect and that some years following its principles won’t even beat a passive market cap weighted index. But what it does do is tilt the odds in your favor by consistently exploiting the psychological failings of your opponents in the market.

If you’re relying on your gut rather than a rule-based approach to investing, you can be almost certain that your feelings of risk or safety are exactly the opposite of what they ought to be.

The fact that people are fallible is your biggest enduring advantage in the accumulation of greater wealth. The fact that you are just as fallible is the biggest impediment to that very same goal.

Get rich fast and get poor fast are opposing sides of the same coin.

Intuition is the silent coming together of a lifetime of learning and must be cultivated if it is to be useful.

The behavioral investor understands and seeks to mimic the best parts of passive investing - low turnover, rock bottom fees and appropriate diversification - without succumbing to absentminded buying and selling.

This book could have easily been three words long: automate, automate, automate. It likely wouldn't have sold well, and you might have ignored the advice on account of it seeming too simple, but the fact is that many of the thornier elements of emotion can be done away with entirely by slavishly following a system of investment rules in all types of market weather.