Original source: SimoleonSense.com .
Introduction (via David Randall @ Forbes)
Terrance Odean, a finance professor at the University of California, Berkeley’s Haas School of Business, has spent his career studying a very specific type of investor: the one who is overconfident, shortsighted and far more likely to snap up a stock at the worst possible moment than to make the kind of contrarian bet that pays off in the long run. Odean’s specialty, in other words, is the average investor.
“Many of the mistakes investors make come from a lack of any understanding of the innate disadvantages they face,” Odean says.
As a student of how investors act in the real world, Odean is part of the burgeoning field of behavioral finance, which, over the past three decades, has blended elements of neurology, psychology and economics. It has revealed that, contrary to the preachings of classical economics, individual investors tend to be anything but rational, self-interested profit maximizers. Their own worst enemies would be a more apt description.
Click Here To Read: The Average Investor Is His Own Worst Enemy
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