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Emotions and markets
The latest edition of the Global Investor is about "Emotions and Markets" from a behavioral finance perspective.Credit Suisse today published its latest semi-annual Global Investor – Emotions and Markets, with the primary focus on the importance of behavioral finance in investing. The role of behavioral finance has gained increasing attention over the last decade as people have tried to get a better understanding of investors and their role in the evolution of financial markets. This publication looks at the impact of various aspects such as the media, demography and gender on investor behavior and contains several interesting articles from industry leaders, academics and Credit Suisse research analysts.
Behavioral finance research has led to a better understanding of the investor and the many factors that influence their behavior in various situations. This publication brings together several key themes to provide a valuable insight into the subject. The Global Investor contains a total of thirteen articles, the majority being on the subject of behavioral finance, but several articles also focus on specific investment themes, including leapfrogging technologies and innovations for the base of the pyramid consumers.
Bounds of rationality – how ideal and real investors behave
As investors look for guidance in volatile markets, they often default to following the herd rather than a structured rational approach to decision making. This article written by Credit Suisse analysts provides investors with a rational decision framework to avoid some of the obvious psychological traps. Thorsten Hens, Professor of Financial Economics at University of Zurich confirms that all kinds of mistakes that investors are making are part of being human. In his articles, he explains how behavioral finance can help investors recognize psychological traps and make more rational investment decisions.
Making sense of bubbles – why are financial bubbles such a persistent feature of history?
This article analyses the symptoms and causes of bubbles in financial markets from the perspective of scientific research looking at investors' minds rather than the usual macroeconomic factors. The author discusses both the psychological and physiological evidence that drives investors to periods of irrational exuberance, which in turn leads to the creation of bubble markets.
Gender – impact on investment decisions and performance
The topic of gender has received a lot of attention over the last few years, several authors have written contributions examining its influence in the context of investment styles, risk appetite and ultimately performance. Additionally, the Global Investor features interviews with four leading women from the financial services industry on the topic.
Media – the way the media present financial news influences investor behavior
Analyzing people’s emotional responses to media campaigns has long been a cornerstone of marketing research. Media effects, both direct and indirect, can lead to behaviors that have profound implications for individual investors and the markets alike. Werner Wirth and Katharina Sommer from the Institute of Mass Communication and Media Research at the University of Zurich examine the influence of media news content on financial decision making.
Generation differences – what makes the next generation of investors different?
The analysis of demographics and populations has being undergoing a revolution as this long overlooked topic is providing important information on the development of population and characteristics of people and their far-reaching implications on financial markets. The contribution by the demographic expert at Credit Suisse focuses on how the younger generations are evolving different patterns of behavior from their parents and how this is affecting such things as consumption, communications and social patterns.