The Bankwatch

Tracking the consumer evolution of financial services

The effect of psychology on investing behaviour

This is a fascinating summary and review of various factors that drive investment behaviour, and surprisingly few of which have anything to do with rational investment return. 

Homo economicus – or more like Homer Simpson? Deutsche Bank Research

Many of the issues listed here may seem obvious. But in an environment like economics and finance, precisely because it is perceived as being so highly rational, the influence of psychological factors and sentiment is frequently underestimated. Of course, heeding these points – arguably not always such an easy matter in practice – will not automatically guarantee the success of an investment. But it could certainly help avoid mistakes here and there. As with  Homer Simpson, who acknowledges the effect of psychology on his behaviour when he realises that he is confused, the situations we have described may contribute to a clearer awareness of the impact that psychological factors have on our decision making.

Written by Colin Henderson

June 29, 2010 at 22:13

Posted in Uncategorized

%d bloggers like this: