Greetings randy,
We like to keep the Leadership Chronicles to once a quarter as we don't want to contribute to your daily barrage of email. At the same time we want to ensure our content is worth your attention (BTW, it's estimated that there are 100 Billion emails sent per day, that's about 75 each).
We have been hearing from several of our clients (especially
in the Financial and Wealth Management space) that a workshop in Behavioral
Finance would be very relevant. It
fits well with our premise that being aware of your own and your clients' tendencies,
while under pressure, is extremely valuable. We now offer a Behavioral Finance Workshop and thought that this newsletter supplement would be a good
way to catalog and pass along the thinking we have leveraged.
"Behavioral Finance is the study of the influence of psychology on the behavior of financial practitioners and its subsequent effect on markets. Behavioral finance is of interest because it helps explain why and how markets might be inefficient." Martin Sewell, Department of Computer Science, University College London. His paper is a great place to start for an overview of the concept. Our take on Behavioral Finance can be found here or our workshop overview here.
We hope you enjoy this newsletter even if Behavioral Finance is not your focus. Follow this link to take a look at previous Leadership Chronicles
All the best,
Randy Sabourin & Cam Anderson
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The Good, The Bad and the Blogs
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 With the spotlight being shone on the financial market there are more than enough opinions about Behavioral Finance. Here are a few blogs that we think give a range of opinions and thoughts. Please keep in mind that not all these opinions reflect those of Anderson Sabourin!
First up; Stock Market Psychology: Behavioral finance, new research, and beyond. This blog is written by Frank Murtha, Ph.D. who is a Business Professor at New York
University and Richard Peterson who is a portfolio manager in LA.
Next we have a blog from Erik van Dijk, who is the managing director of Lodewijk Meijer bv, an implementation consulting
firm active in the Dutch and other European institutional markets. His Spotlight on Investments and Markets blog is an interesting point of view.
The Wealthy Boomer blog grew out of a 1998 book published by Key Porter
Books and the National Post. The Wealthy Boomer: Life After Mutual
Funds was written by Jonathan Chevreau with co-authors Kelly Rodgers
and Michael Ellis, both financial professionals.
And finally The Guru Investor is a blog from John Reese.
There are a million more blogs of course! |
 Articles on Behavioral Finance
Warning: Quants love the 'predictably irrational' By predicting your behavior, quants control your mind, money, the markets. is an interesting look at 'quants' the people who use quantitative analyst to predict the market by Paul Farrell.
Diagnosing Behavioral Investor Types
is an interesting article from the Morningstar Advisor,
which is an ezine that focuses on investing insights for advisors. Michael Pompian,
CFA, CFP is an investment consultant, his book, Behavioral Finance and Wealth
Management, is helping thousands of financial advisors globally build better
relationships with their clients.
Behavioral Finance-Benefiting from Irrational Investors.
This article was published in June 2007 by Julia Hanna on
the Harvard Business School Working Knowledge site. The site looks at research
and ideas that are generated by the faculty.
The Anatomy of Fear. A Newsweek article explains how fear can rule the financial marketplace.
Behavioural Finance: traps lie ahead, from CityWire in London UK.
When To Sell Your Stocks by David Serchuk,
03.04.09 Forbes, "We tend to sell at the wrong times. Behavioral science can free you from your attachment to loser investments."
Harold Bradley: Why selling stocks now may be a really bad idea... Found in the Kansas City Star. |
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| Books on Behavioral Finance
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NOFSINGER, Investment Madness : How Psychology Affects Your Investing--and What to Do About It, |
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We know your time is valuable so thank you for taking a minute to look at our view of leadership and the world around us. You can find more information at our site or send us your thoughts at info@anderson-sabourin.com.
Sincerely,
Randy & Cam
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Behavioral Finance Workshop
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ASCI New Offer
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In the financial industry, decision making in
investments tends to follow a linear, rational process until.... it doesn't! Whether you are a portfolio manager, financial
advisor, insurance producer, trader, dealer, or analyst, Behavioral Finance
helps explain the psychological forces that move markets. Our program provides answers to the two
primary concerns in this field: 1) what are the irrational, driving forces behind
investment behavior, and 2) how you as a professional can manage them better.
Whether you are experiencing a bull or
bear market, these perspectives and skills will prepare you for this crucial
element of professional management so you are never again ill prepared for the
irrational investor.
The workshop can be delivered in a 1 or 2 day format, includes a TAIS profile for each participant and is delivered
using a blended learning style of lecture,
break-out sessions, multi-media and exercises designed to address the learning
styles of the participants.
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Video Feature
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ASCI on Behavioral Finance
This
is a great time to be regrouping with your management team and aiding
them in adding valuable context to their roles as leaders in the
organization. As their direct reports
struggle with increasingly turbulent and uncertain capital markets, your
leaders have an opportunity to help them connect the dots between their
client's and prospect's, their behavioral characteristics (like performance
under pressure and predictable irrationality) and their own. An emerging area of study
called Behavioral Finance can be explored with your management team in
the context of helping them gain perspective on why they and their
customers approach the current environment in predictable ways.
"I'd be a bum on the street with a tin cup if the markets were always efficient." - Warren Buffet
In
spite of compelling evidence that our financial markets are highly
efficient, there have been many studies that have shown several
phenomena in securities markets that contradict the efficient market
hypothesis. Such phenomena are often referred to as stock market
anomalies.
Behavioral Finance is a branch within the field of
finance which explores psychology-based theories to explain such
irregularities. Within the Behavioral Finance realm it is assumed that
the emotional characteristics of market participants and the flow of
information amongst them systematically influence investment decisions
as well as market outcomes.
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