TY - JOUR T1 - Recent Developments in Behavioral Finance JF - The Journal of Wealth Management SP - 25 LP - 37 DO - 10.3905/jwm.2000.320376 VL - 3 IS - 1 AU - Hersh Shefrin Y1 - 2000/04/30 UR - https://pm-research.com/content/3/1/25.abstract N2 - Setting this article against a background of recent academic work, the author reviews the highlights of these studies, emphasizing issues that are particularly relevant for portfolio construction. First, he discusses recent evidence of the ‘disposition effect,’ meaning ‘the disposition to sell winners too early and to hold on to losers too long.’ The helps him present recent evidence on the disposition effect and introduce some of the basic concepts from behavioral finance for those new to the subject. Next, the author addresses the issue of overconfidence, one of the most prevalent behavioral phenomena. He reviews these findings which are based on recent studies about the forecasts, trades, and performances of participants in investment clubs. Finally, he examines two issues that are specifically relevant for retirement portfolios, although they also have more general implications. The first involves naive diversification and the second pertains to the rules investors use to determine how quickly retirement nest eggs are spent. ER -