Behavioural Finance Theories Effecting on Individual Investor's Decision-Making
Leppinen, Essi (2013)
Leppinen, Essi
Metropolia Ammattikorkeakoulu
2013
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Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:amk-201401111213
https://urn.fi/URN:NBN:fi:amk-201401111213
Tiivistelmä
The author of this dissertation chose the topic of behavioural finance theories for the reason of studying the controversial relevance of these theories in relation to investment strategies. Reading investment books and newspaper articles has been a part of the writers' daily life for many years. Hence, the writer’s interest towards investment strategies and behavioural finance theories has grown over time. Behavioural theories are seen as a relatively new phenomenon in the security markets. Therefore, examining the subject is essential in order to understand the changing world of investments.
In today's world investing in stocks and funds is made easy. Investors do not need any specific edu-cation or knowledge in order to purchase stocks. Current technology enhances fast trade between individual investors. The concept of investing is seen as trendy. Therefore, people have a tendency to make illogical decisions not based on true knowledge or information of a certain investment ob-ject. These decisions are explained via several behavioural finance theories. The outcome of poor knowledge is that investors allow these theories to effect on their decision-making process, thus resulting in major losses. The behavioural models can effect on individuals’ decision-making whether actual investments are conducted via professionals or not.
The concept of investing is extensive as it can include all the aspects of purchasing items expected to gain more value in the future (art, antique, securities etc.). Therefore, the author has decided to narrow down the subject to concentrate on stock trading and the impact of behavioural finance on individual investors and money markets. The concept of money markets is misleading as the market itself does not consist of cash, but objectives having high liquidity are therefore referred to as money.
In today's world investing in stocks and funds is made easy. Investors do not need any specific edu-cation or knowledge in order to purchase stocks. Current technology enhances fast trade between individual investors. The concept of investing is seen as trendy. Therefore, people have a tendency to make illogical decisions not based on true knowledge or information of a certain investment ob-ject. These decisions are explained via several behavioural finance theories. The outcome of poor knowledge is that investors allow these theories to effect on their decision-making process, thus resulting in major losses. The behavioural models can effect on individuals’ decision-making whether actual investments are conducted via professionals or not.
The concept of investing is extensive as it can include all the aspects of purchasing items expected to gain more value in the future (art, antique, securities etc.). Therefore, the author has decided to narrow down the subject to concentrate on stock trading and the impact of behavioural finance on individual investors and money markets. The concept of money markets is misleading as the market itself does not consist of cash, but objectives having high liquidity are therefore referred to as money.