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Book Review of "Behavioral Investment Management" (2012)

Thu, 22 Mar 2012 12:25:21 GMT

Behavioral Investment Management: An Efficient Alternative to Modern Portfolio Theory by Greg B. Davies and Arnaud De Servigny (McGraw-Hill, 2012)“People in standard finance are rational. People in behavioral finance are normal.” Meir Statman, PhD, Santa Clara UniversityThe above quote by Meir Statman captures concisely the thrust of the concepts explored extensively in this new book by Greg Davies and Arnaud De Servigny.  They tackle what is by now a relatively widespread view that modern portfolio theory (MPI) has fundamental flaws when used blindly to build portfolios for individuals.  However, rather than throwing the baby out with the bath water, they zero in with quantitative precision on the aspects of this developed theory that they counsel should be modified to reflect the fundamental truth of how humans process concepts and make decisions.   You should note that Greg is Global Head of both Behavioral and Quantitative Investment Philosophy at Barclays...

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