Investments: Theory, Behavioral Aspects and Applications

Investments: Theory, Behavioral Aspects and Application covers behavioral aspects of investing, investment strategies including buy and sell disciplines, technical analysis, plus the more standard textbook topics of security valuation and risk analysis, asset class management, investment applications, derivative valuation, portfolio construction and investment evaluation. The behavioral topics range from psychological factors to “deadly sins” of financial decision making. As part of the behavioral aspects a brief overview of technical analysis is presented. The first two chapters set the stage for investing by presenting various elements of investment management and behavioral aspects. These chapters help lay out the environment in which investors and others operate. The next three chapters present basic valuation and risk characteristics of bonds and stocks. Bonds and stocks are two main asset classes that are large, global, part of “everyone’s portfolio,” and are the basis for many derivative instruments. Next we turn our attention to strategies and applications. Disciplined stock selection and tactics are presented in Chapter 6, while the most important decisions relating to investing, namely asset allocation, is discussed in Chapter 7. Styles and strategies, and global investing are then presented in the next two chapters respectively. Chapter 10 presents the term structure of interest rates and bond strategies. Our attention then turns to derivative securities in Chapters 11 and 12. The book concludes with a brief introduction to modern portfolio theory and investment performance evaluation. The main body of the book is divided into five sections and the chapters present the material in an outline form with essays to expand on the material. For the more advanced reader the outline provides a synopsis and allows the reader to decide if they need to refresh their knowledge or if they need to expand their knowledge by reading the essay portions. For the less advanced reader the outline provides a summary of the material and the essay portions fill in the details for a fuller understanding of the topics presented. Each section has a brief overview of the material contained in the section. For each chapter thought questions are provided for student learning. Additionally, the student should expand their learning experience and explore the Internet. In fact the student is strongly encouraged to explore the Internet and other sources to further enhance the chapter material and their learning experience. For example the derivative chapters should be expanded by visits to the Chicago Options Exchange and the Chicago Board of Trade websites. Our goal in this book is to blend the theory of investments and asset pricing with the behavioral side of investing and introducing “pragmatic applications.” This is not a book that only prescribes what investors should do nor does it present detailed examples. Instead it recognizes that the savings and investment process is dependent on individual choice and the decisions regarding the appropriate investments should be based on risk tolerance. If you are interested in adopting this book for your investments course please contact: Dr. Walter J. Reinhart Loyola University Graduate Center 2034 Greenspring Drive Timonium, MD 21093