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Behavioural Finance by James Montier
  • Behavioural Finance

  • Insights into Irrational Minds and Markets

  • by James Montier
In stock, usually dispatched within 24 hours

    • Product code: 15664
    • ISBN: 0470844876, ISBN13: 9780470844878, 212 pages, hardback
      Published by John Wiley & Sons on 2002 , New title
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    Description of Behavioural Finance

    A concrete guide that links the theory of behavioral finance with applications in financial products Behavioral finance is a rapidly expanding field, with major implications for the way in which the investment process is conducted. Behavioural Finance links the concepts of behavioral finance to measurable variables and smarter investment decision making. Comprehensive coverage relating theory to practical investment analysis provides a usable, practical guide for real-world situations.

    Reviews

    "...The finding is surprising, as the City is notoriously full of arrogant young men betting on financial markets…Mr Montier has unearthed bizarre facts which suggest stock markets are frequently driven by entirely irrational factors..."
    - The Daily Telegraph, 25 November 2002

    "...In a new book, James Montier…outlines practical methods for exploiting the anomalies thrown up by behavioural finance..."
    - Financial Times, 25 November 2002

    "…a good introduction to this subject…."
    - Professional Investor, March 2003

    Contents of Behavioural Finance

    Introduction

    1. Psychological Foundations
    Introduction
    Biases of Judgement or Perception is Reality
    Errors of Preference or There is No Such Thing as Context-free Decision Making
    Conclusions

    2. Imperfect Markets and Limited Arbitrage
    Introduction
    Ketchup Economics
    Efficiency and LOOP
    Stock Market
    Other Markets
    Imperfect Substitutes
    Limited Arbitrage
    Positive Feedback Trading
    Risk Management and Limited Arbitrage
    On the Survival of Noise Traders
    Informational Imperfections
    Conclusions

    3. Style Investing
    Introduction
    The Data
    The History
    Potential Gains to Style Rotation
    Life Cycle of an Investment Style
    Value vs. Growth: Risk or Behavioural?
    Style Rotation
    Quantitative Screens
    Timing the Switch
    Conclusions

    4. Stock Valuation
    Introduction
    Keynes' Beauty Competition
    The (Ir)relevance of Fundamentals
    Valuation and Behavioural Biases
    Cost of Capital
    Factors from Limited Arbitrage
    An Analyst's Guide

    5. Portfolio Construction and Risk Management
    Introduction
    Covariances
    Correlations
    Distribution of Returns
    Fat Tails or Outliers?

    6. Asset Allocation
    Introduction
    Markets and Fundamentals
    Dividend Yield, Spreads and Ratios
    Earnings Yield, Spreads and Ratios
    Payout Ratio
    The Equity Risk Premium
    Should Corporate Financiers be Running TAA?
    Market Liquidity
    Crashes as Critical Points

    7. Corporate Finance
    Introduction
    Irrational Managers/Rational Markets
    Rational Managers/Irrational Markets
    Conclusions

    8. The Indicators
    Introduction
    Liquidity Measures
    Sentiment Measures
    Asset Allocation Measures
    Earnings Measures
    Technical Measures
    Others

    Final Thoughts
    Bibliography
    Index

    About James Montier

    James Montier (London, UK) is the Director of Global Strategy at Dresdner Kleinwort Watterstein. Prior to this, he was director of investment strategy for Old Mutual Securities.

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