Summary of Michael M. Pompian's Behavioral Finance and Wealth Management

Please note: This is a companion version & not the original book. Book Preview: #1 The goal of Part One is to explain the basics of behavioral finance and its effects on the investment process.

By understanding these biases, investors and their advisors can improve economic outcomes and attain stated financial objectives.#2 The field of behavioral finance seeks to understand and explain the behaviors of investors and markets, both individually and collectively.

By understanding how investors and markets behave, it may be possible to adapt to these behaviors and improve financial outcomes.#3 Behavioral finance is the application of psychology to finance.

It has become a very hot topic, and many investors and advisors are familiar with the terms bandied about in books, magazines, and investment papers.

However, many people lack a firm understanding of the concepts behind behavioral finance.#4 The field of behavioral finance is full of brilliant researchers who have contributed to the field over the past few decades.

The first prominent figure we will discuss is Professor Robert Shiller, who has warned investors that stock prices have climbed too high.