Better Behavioural Finance Books?

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Expro
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Better Behavioural Finance Books?

Post by Expro » Thu Aug 16, 2018 5:09 pm

I know several of you folk have favorite behavioral finance books. Care to make a few recommendations?
Thnaks

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David Jay
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Re: Better Behavioural Finance Books?

Post by David Jay » Thu Aug 16, 2018 5:40 pm

“Your Money and your Brain” by Jason Zweig.

For a deeper dig (and not just finance) there is “Thinking, Fast and Slow” by Daniel Kahneman
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Fallible
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Re: Better Behavioural Finance Books?

Post by Fallible » Thu Aug 16, 2018 5:56 pm

The wiki lists some of the best in the "Behavioral finance" category:
https://www.bogleheads.org/wiki/Books:_ ... nd_reviews

Are you looking for anything in particular on this topic?
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VictoriaF
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Re: Better Behavioural Finance Books?

Post by VictoriaF » Thu Aug 16, 2018 6:05 pm

"Nudge" and "Misbehaving" by Richard Thaler, 2017 Nobel Prize winner.

Victoria
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Sic Vis Pacem
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Re: Better Behavioural Finance Books?

Post by Sic Vis Pacem » Thu Aug 16, 2018 8:31 pm

I'd strongly second the recommendations for Thaler's "Nudge" and Kahneman's "Thinking, Fast and Slow." The latter I've re-read twice now and I think it may be another read or two before I fully understand all of the lessons contained therein.

To add to the list, I'd recommend anything by Daniel Ariely, particularly "Predictably Irrational: The Hidden Forces that Shape Our Decisions " and "Dollars and Sense: How we misthink money and How to Spend Smarter"

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Re: Better Behavioural Finance Books?

Post by totesmagotes » Thu Aug 16, 2018 8:46 pm

I really liked "Misbehaving" by Thaler. I found it very accessible and interesting. Granted, I listened to the audiobook version on my long daily commute, but I really liked it. I didn't mind "Nudge", though I liked "Misbehaving" considerably more.

If you want to get more academic and get into the nitty gritty, "Thinking Fast and Slow" by Kahneman is great. As with other books, I listened to the unabridged audiobook, though admittedly I zoned out a few times. I think it'll require another listen through to better retain the incredible amount of information contained in it.

Expro
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Re: Better Behavioural Finance Books?

Post by Expro » Fri Aug 17, 2018 9:04 am

Great. Thanks. I will check these out.

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VictoriaF
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Re: Better Behavioural Finance Books?

Post by VictoriaF » Fri Aug 17, 2018 10:01 am

I specifically recommended Thaler's books earlier in this thread, because he is a "real economist" and his work has a greater emphasis on the behavioral finance.

Kahneman and Ariely are psychologists (Ariely got a psychology degree but is now an academic in behavioral economics). Their books are excellent and I highly recommend them, but they have a greater element of psychology, especially Kahneman's "Thinking, Fast and Slow." If the OP is particularly interested in behavioral finance, I'd focus on Thaler's books. If the OP used "behavioral finance" in a general sense of behavioral economics, I'd recommend reading in the following order:
1. Ariely's "Predictably Irrational"
2. Thaler's "Misbehaving"
3. Michael Lewis's "The Undoing Project"
4. Kahneman's "Thinking, Fast and Slow"

The author who has made the greatest impact on my attitude to investing is Nassim Taleb with his "The Black Swan." After that book, I am immune to the market hype and have internalized the concept that the past performance does not mean anything for the future.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

khangaroo
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Re: Better Behavioural Finance Books?

Post by khangaroo » Fri Aug 17, 2018 4:30 pm

I might get some hate for this but Dave Ramsey's "The Total Money Makeover" completely changed my behavior and thinking about debt and personal finance.

As Dave likes to say, "Personal finance is 80% behavior and 20% head knowledge"

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Re: Better Behavioural Finance Books?

Post by Fallible » Fri Aug 17, 2018 8:15 pm

VictoriaF wrote:
Fri Aug 17, 2018 10:01 am
I specifically recommended Thaler's books earlier in this thread, because he is a "real economist" and his work has a greater emphasis on the behavioral finance.
...
Victoria, that's a good point about Thaler being an economist, the link between the psychologists Kahneman and Tversky and the economists. And it's even better understood when one learns how poorly Thaler fared (still does) with some of the "econs" he writes about. Best of all, to me, Thaler's sense of humor, which I think plays an important role in his broad outlook and understanding of what it is to be human and, um, fallible.
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Grt2bOutdoors
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Re: Better Behavioural Finance Books?

Post by Grt2bOutdoors » Fri Aug 17, 2018 8:21 pm

khangaroo wrote:
Fri Aug 17, 2018 4:30 pm
I might get some hate for this but Dave Ramsey's "The Total Money Makeover" completely changed my behavior and thinking about debt and personal finance.

As Dave likes to say, "Personal finance is 80% behavior and 20% head knowledge"
That, and adults devise a plan and carry it out, children do what “feels good”. Grow up! Stop letting your money control you, you control it not the other way around.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Better Behavioural Finance Books?

Post by Grt2bOutdoors » Fri Aug 17, 2018 8:24 pm

VictoriaF wrote:
Fri Aug 17, 2018 10:01 am
I specifically recommended Thaler's books earlier in this thread, because he is a "real economist" and his work has a greater emphasis on the behavioral finance.

Kahneman and Ariely are psychologists (Ariely got a psychology degree but is now an academic in behavioral economics). Their books are excellent and I highly recommend them, but they have a greater element of psychology, especially Kahneman's "Thinking, Fast and Slow." If the OP is particularly interested in behavioral finance, I'd focus on Thaler's books. If the OP used "behavioral finance" in a general sense of behavioral economics, I'd recommend reading in the following order:
1. Ariely's "Predictably Irrational"
2. Thaler's "Misbehaving"
3. Michael Lewis's "The Undoing Project"
4. Kahneman's "Thinking, Fast and Slow"

The author who has made the greatest impact on my attitude to investing is Nassim Taleb with his "The Black Swan." After that book, I am immune to the market hype and have internalized the concept that the past performance does not mean anything for the future.

Victoria
Noted. I have kahneman’s book, but I have to take my time reading it to absorb it. I find it to be “dry” reading.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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6miths
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Re: Better Behavioural Finance Books?

Post by 6miths » Fri Aug 17, 2018 8:37 pm

Love all these (with the exception of Dave Ramsey which I am not familiar with). I have read 'Thinking, Fast and Slow' a couple of times and listened to it on audiobook a couple of times as well. Most of these deserve some deep thought.
'It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so!' Mark Twain

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Taylor Larimore
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Simple portfolios minimize behavioral problems

Post by Taylor Larimore » Fri Aug 17, 2018 9:01 pm

Expro wrote:
Thu Aug 16, 2018 5:09 pm
I know several of you folk have favorite behavioral finance books. Care to make a few recommendations?
Thnaks
Expro:

There is little question that our financial behavior is very important. This is a major benefit of owning a simple portfolio, and then staying-the-course.

The Three-Fund Portfolio

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle

grok87
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Re: Better Behavioural Finance Books?

Post by grok87 » Sat Aug 18, 2018 10:43 am

Fallible wrote:
Fri Aug 17, 2018 8:15 pm
VictoriaF wrote:
Fri Aug 17, 2018 10:01 am
I specifically recommended Thaler's books earlier in this thread, because he is a "real economist" and his work has a greater emphasis on the behavioral finance.
...
Victoria, that's a good point about Thaler being an economist, the link between the psychologists Kahneman and Tversky and the economists. And it's even better understood when one learns how poorly Thaler fared (still does) with some of the "econs" he writes about. Best of all, to me, Thaler's sense of humor, which I think plays an important role in his broad outlook and understanding of what it is to be human and, um, fallible.
Another plug here for Thaler.

I read kahneman’s book and liked it. But...

Kahneman cites a lot of other psychological studies besides his own. I trust kahneman’s research but not the others. There is a huge problem in that most psychological research is not replicable, in other words it is fake. For example kahneman cites the pencil study. Holding a pencil between your upper lip and nose and thus forcing yourself to smile was claimed to make you feel happier. The trouble is the study is not replicable ie it is false.

https://theeconomyofmeaning.com/2016/08 ... eel-happy/

Cheers
Grok
Keep calm and Boglehead on. KCBO.

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DWesterb2iz2
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Re: Better Behavioural Finance Books?

Post by DWesterb2iz2 » Sat Aug 18, 2018 10:51 am

Delete, Wrong thread

dh
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Re: Better Behavioural Finance Books?

Post by dh » Sat Aug 18, 2018 7:16 pm

VictoriaF wrote:
Thu Aug 16, 2018 6:05 pm
"Nudge" and "Misbehaving" by Richard Thaler, 2017 Nobel Prize winner.

Victoria
+1 Those two books by Thaler are my favorites.

2015
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Re: Simple portfolios minimize behavioral problems

Post by 2015 » Sat Aug 18, 2018 7:19 pm

Taylor Larimore wrote:
Fri Aug 17, 2018 9:01 pm
Expro wrote:
Thu Aug 16, 2018 5:09 pm
I know several of you folk have favorite behavioral finance books. Care to make a few recommendations?
Thnaks
Expro:

There is little question that our financial behavior is very important. This is a major benefit of owning a simple portfolio, and then staying-the-course.

The Three-Fund Portfolio

Best wishes.
Taylor
This.

I have spent a great deal of time reading widely outside the fields of personal finance, economics, and investing. This has included physics, engineering, game theory, poker, philosophy, psychology, among others. I am convinced more than ever of the great danger of complexity due to human behavior and highly flawed human decision-making. I believe this danger is far greater than any failure to devise the most clever portfolio or investing strategy.

I am equally convinced that perhaps the very best action I have taken in my entire investing career was to navigate my investing ship to a 3 fund portfolio and sail only in the waters of simplicity. I've come to the conclusion everything else is tantamount to voyaging in the waters of the Bermuda Triangle.

I highly recommend reading Poor Charlie's Almanac by Charlie Munger. I have found nothing more valuable than his concept of developing a latticework of mental models for oneself on which to hang decisions.

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