The Psychology of Investments

Abstract

The author argues that interest in the psychology of investments has begun to intensify, even though associated issues are timeless. He suggests that the psychology of investments can be said to provide a rubric under which the apparently irrational behavior of both lay and professional investors are understood. He identifies a handful of trends creating urgency around the topic and briefly reviews them. Then, the authors offer three areas the investment community needs to monitor in the next several years for important insights about the psychology of investments: behavioral finance, marketing and sale of investments, and “lessons from the consulting room.”