Mind on My Money

How to invest wisely

John Nofsinger is an associate professor of finance at Washington State University and a speaker, writer, and scholar on behavioral finance. See full bio

December 24, 2008

It takes Trust to Invest

Trust is important for people to invest in stocks. This posting illustrates the general relationship between trust and participation in the stock market.

The stock market involves much risk and uncertainty.

September 5, 2008

Does Financial Regulation Protect Investors?

After reading several of these posts, you may think that investors need more regulations created to protect them from themselves. It is true that cleverly designed policies, rules, and laws can help investors. Unfortunately, these are few and far between. Why? Read More

August 20, 2008

All That Glitters: Buying Attention Grabbing Stocks

One stock gained 10% yesterday...another lost 15%. One company has been splashed all over the TV lately. Another has had very high trading volume. We notice these things. In fact, we typically buy attension-grabbing stocks. Do stocks that glitter turn out to be gold? Read More

July 29, 2008

What Investment Characteristics are Important to You?

Are risk and return the only investment characteristics that matter to you? Do you consider social values, patriotism, social status, or religious beliefs when investing? Read More

July 25, 2008

Familiarity Bias PART I: What is it?

Investors tend to trade in the secrities with which they are most familiar. There is comfort inhaving your money invested in a business that is visible to you. But this familiarity bias has a strong influence on what you buy and the investment risks you take. Read More

July 21, 2008

Surprised Again? The Anchoring Bias of Investors

People anchor to specific prices or amounts and make small adjustments from these anchors as their predictions. This anchor bias impacts everything from lawsuit awards to online auction bids to analsyst forecasts...and to how you feel about your own investments. Read More

July 19, 2008

Portfolio Creation: Concentration or Diversification?

Don't put all your eggs in one basket. The wisdom of diversification has been touted for decades. Why do investors concentrate their portfolios rather than diversify? Read More

July 15, 2008

Bubble Emotions: Where are we with financial stocks?

The behavior and emotions of investors during a price bubble can be extreme. Consider the cycle of investor emotions spurred by a bubble and shown in the figure. These emotions can cause investors to "buy high" during the thrilling and euphoric stages of a bubble, and "sell low" at the panic and capitulation stages. Warren Buffet recommends that you be "fearful when others are greedy and greedy when others are fearful." Read More

July 11, 2008

Analytical/Intuitive Thinking: PART IV, Patience

What is the value of money over time? Although financial theory has specific time value of money relationships, people often think very differently from these relationships. One determinant may be whether you think intuitively or analytically. Read More

July 9, 2008

A Rose.com, or Not

What if companies could manipulate your feelings about them? One example is a name change. Does a change to a dotcom change your feelings about the firm? Read More

Books by John Nofsinger, Ph.D.

Psychology of Investing (3rd Edition)

Behavioral Economics Basics

Why do we often think we know what we want, only to be disappointed with our purchases and choices? Behavioral economics studies just how irrational we humans can be.

Go to the Behavioral Economics Basics page for more on Behavioral Economics including:

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Books by John Nofsinger, Ph.D.

Behavioral Economics Basics

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