The central issue in behavioral finance is explaining why market participants make systematic errors contrary to the assumption of rational market participants. Such errors affect prices and returns, creating market inefficiencies. It also investigates how other participants take advantage (arbitrage) of such market inefficiencies. Some of the following traits, knows as heuristics follow. Psychology concepts … Continue reading Key Considerations of Behavioral Finance
In the last week we have seen oil prices drop to a 5 year low with double digit falls in less than a week. This has disturbed many countries that are dependent on oil revenue such as Russia, Nigeria and Norway. The markets can be affected by numerous factors and a sometimes we simply do … Continue reading Dealing with market volatility
What do active investors do? Active investors believe that markets are “inefficient”. They believe that at any point in time, there are always some securities that are mis-priced, enabling them to buy or sell making a profit. Professional active investors devote unbelievable amounts of time and resource towards trying to find that extra edge. They … Continue reading Active or passive what’s for you
In a world with separation between wealthy and poor, global financial crisis, and ever changing financial landscapes it is no surprise that many investors remain cautious. There are many more factors to take in account, we are living longer, spending more and the emerging nations are developing fast. So do you save your money in … Continue reading Invest or Save what’s the difference?