Finance for Normal People

Finance for Normal People shows how behavioral finance offers numerous insights into the performance of investors and managers as well as the functioning of markets. Meir Statman, a founder of behavioral finance, provides a unified approach to understanding financial behavior. He draws on his extensive experience and the most insightful research to enhance our awareness about the short-cuts and errors that normal people make in financial decisions and planning.He also emphasizes the importance learning the lessons of behavioral finance and applying them to banish ignorance, gain knowledge, and increase the ratio of smart to stupid behavior on our way to what we want.Behavioral finance is finance for normal people who experience cognitive and emotional errors, including overconfidence, exaggerated fear, and unrealistic hope. Normal people want to beat the market and feel pride they make gains and regret when they make losses. They also care about their familiesand social values. Normal people make important decisions about forming portfolios, saving and spending in working years and retirement, and readily taking gains while being reluctant to realize losses. As a result, normal people's wants and errors affect financial markets.With financial markets uncertain, standard approaches to finance suffer from wide cracks between theory, guidance, and evidence. With ordinary people uneasy about their financial future, Finance for Normal People encourages changing how we think and act in the pursuit of our goals.