Beyond Greed And Fear: Understanding Behavioral Finance And The Psychology Of Investing by Hersh Shefrin
People who study finance at university learn about the efficient market hypothesis, which concludes that all stocks are correctly priced, and therefore investors cannot consistently outperform the market. This hypothesis is based on the assumption that all investors are rational, and that rational investors take all publicly available information and correctly use that information to determine the value of a stock.
Beyond Greed and Fear was the first book that helped Chris understand how psychology affects his own (and everyone else’s) investment decisions. After reading the book you will be much more aware of the biases that influence your investment decisions, and how biases can influence other people too. Hopefully this will assist you to outperform the market, and prove that the efficient market hypothesis is not right! In addition to Beyond Greed and Fear, we encourage you to download our free ebook, A Guide To Analysing Company Fundamentals, which talks about some common biases such as “always look to buy stocks with a low PE ratio”.