Meir Statman, Glenn Klimek Professor of Finance at Santa Clara University and author of "A Wealth of Well-Being," shares insights on behavioral finance and the emotional aspects of investing. He recounts his family's journey as refugees, emphasizing resilience. The discussion navigates the shift from traditional finance to understanding emotional biases that influence decision-making. Statman advocates for integrating well-being into financial strategies, critiquing the FIRE movement, and highlighting the balance between wealth and happiness.
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question_answer ANECDOTE
Statman's Early Life
Meir Statman's parents were teenagers in Poland during the Nazi invasion.
They escaped to Siberia, then Uzbekistan, where Statman was born in a refugee camp.
question_answer ANECDOTE
Academic Background
Statman studied economics and finance at Hebrew University while Kahneman and Tversky conducted their work nearby.
He was unaware of their research, highlighting the narrow focus of standard economics at the time.
insights INSIGHT
Standard Finance vs. Reality
Standard finance assumed investors were rational, computer-like, and immune to emotion.
This model didn't match real-world observations, leading to the emergence of behavioral finance.
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In 'What Investors Really Want,' Meir Statman combines the principles of behavioral finance with real-world investing to reveal the complex motivations and emotions that drive investor behavior. The book discusses how investors seek more than just financial returns, including expressive and emotional benefits, status, respect, and social responsibility. It also delves into how factors such as age, gender, genetics, and personality influence investment decisions and how to recognize and manage the desires, thoughts, and emotions that drive these decisions to achieve better financial outcomes.
A Wealth of Well-Being: A Holistic Approach to Behavioral Finance
A Wealth of Well-Being: A Holistic Approach to Behavioral Finance
Meir Statman
This book explores the third generation of behavioral finance, expanding beyond wealth maximization to encompass the various aspects of life that contribute to overall well-being.
Meir Statman is the Glenn Klimek Professor of Finance at Santa Clara. His research focuses on behavioral finance as he attempts to understand how investors and managers make financial decisions and how these decisions are reflected in financial markets.
Professor Statman’s research has been published in numerous academic and professional journals and has won many awards. His first book, “What Investors Really Want,” was published in 2011. His latest book, “A Wealth of Well-Being: A Holistic Approach to Behavioral Finance,” is the topic of our discussion in this podcast.
The Bogleheads on Investing podcast is hosted by Rick Ferri, CFA, a long-time Boglehead and investment adviser. The Bogleheads are a group of like-minded individual investors who follow the general investment and business beliefs of John C. Bogle, founder and former CEO of the Vanguard Group. It is a conflict-free community where individual investors reach out and provide education, assistance, and relevant information to other investors of all experience levels at no cost. The organization supports a free forum at Bogleheads.org, and the wiki site is Bogleheads® wiki.
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