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Mind on My Money

How to invest wisely

Behavioral Economics
All That Glitters: Buying Attention Grabbing Stocks

John Nofsinger Ph.D. on August 20, 2008

One stock gained 10% yesterday...another lost 15%. One company has been splashed all over the TV lately. Another has had very high trading volume. We notice these things. In fact, we typically buy attension-grabbing stocks. Do stocks that glitter turn out to be gold?

One stock gained 10% yesterday...another lost 15%. One company has been splashed all over the TV lately. Another has had very high trading volume. We notice these things. In fact, we typically buy attension-grabbing stocks. Do stocks that glitter turn out to be gold?

Leadership
What Investment Characteristics are Important to You?

John Nofsinger Ph.D. on July 29, 2008

Are risk and return the only investment characteristics that matter to you? Do you consider social values, patriotism, social status, or religious beliefs when investing?

Are risk and return the only investment characteristics that matter to you? Do you consider social values, patriotism, social status, or religious beliefs when investing?

Bias
Familiarity Bias PART I: What is it?

John Nofsinger Ph.D. on July 25, 2008

Investors tend to trade in the secrities with which they are most familiar. There is comfort inhaving your money invested in a business that is visible to you. But this familiarity bias has a strong influence on what you buy and the investment risks you take.

Investors tend to trade in the secrities with which they are most familiar. There is comfort inhaving your money invested in a business that is visible to you. But this familiarity bias has a strong influence on what you buy and the investment risks you take.

Behavioral Economics
Bubble Emotions: Where are we with financial stocks?

John Nofsinger Ph.D. on July 15, 2008

The behavior and emotions of investors during a price bubble can be extreme. Consider the cycle of investor emotions spurred by a bubble and shown in the figure. These emotions can cause investors to "buy high" during the thrilling and euphoric stages of a bubble, and "sell low" at the panic and capitulation stages. Warren Buffet recommends that you be "fearful when others are greedy and greedy when others are fearful."

The behavior and emotions of investors during a price bubble can be extreme. Consider the cycle of investor emotions spurred by a bubble and shown in the figure. These emotions can cause investors to "buy high" during the thrilling and euphoric stages of a bubble, and "sell low" at the panic and capitulation stages. Warren Buffet recommends that you be "fearful when others are greedy and greedy when others are fearful."

Behavioral Economics
Analytical/Intuitive Thinking: PART IV, Patience

John Nofsinger Ph.D. on July 11, 2008

What is the value of money over time? Although financial theory has specific time value of money relationships, people often think very differently from these relationships. One determinant may be whether you think intuitively or analytically.

What is the value of money over time? Although financial theory has specific time value of money relationships, people often think very differently from these relationships. One determinant may be whether you think intuitively or analytically.

Behavioral Economics
A Rose.com, or Not

John Nofsinger Ph.D. on July 9, 2008

What if companies could manipulate your feelings about them? One example is a name change. Does a change to a dotcom change your feelings about the firm?

What if companies could manipulate your feelings about them? One example is a name change. Does a change to a dotcom change your feelings about the firm?