Bogleheads On Investing Podcast
Episode 76: Meir Statman talks about his new book, A Wealth of Well-Being, host Rick Ferri
Nov 29, 2024
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.
58:47
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Quick takeaways
- Behavioral finance reveals how cognitive biases and emotional factors significantly impact investor decisions and market performance beyond rational thought.
- The integration of well-being into financial decision-making emphasizes that true wealth encompasses emotional satisfaction and social connections, not just financial gain.
Deep dives
Introduction to Behavioral Finance
Behavioral finance examines how psychological factors influence investor decisions and market outcomes. Traditional finance relied on the assumption that investors were rational and made decisions purely based on information. In contrast, behavioral finance recognizes cognitive biases and emotional responses that lead to irrational behaviors, such as holding onto losing stocks due to regret. This shift from rational to behavioral perspectives has contributed significantly to our current understanding of investor behavior in the financial markets.
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