When A Random Walk was fist published, behavioral finance was much less prominent than it is today. What kind of contribution have the behaviorists made?

I teach behavioral finance in my course on financial markets, and I believe the contributions are really very great. Now, behavioral finance doesn't give you a way to beat the market. But it teaches us a lot of lessons about how to avoid mistakes. The behaviorists teach about overconfidence -- that we've got some illusion of control, and that we tend to trade too much.. And that's absolutely right; it's a wonderful lesson for investors.

Ibbotson Associates data suggest that, over the long haul, the markets have an average annual rate of return of something like 9½% since 1926. But average investors don't make anything like 9½%, because they tend to get in at the top and out at the bottom.

What about portfolio managers who say they can use behavioral finance to exploit opportunities?

I don't believe that at all. I haven't found any of them who can exploit those opportunities. The bubbles are only so clear in retrospect.

From: pgreenfinch <pgreenfinch@...>
Subject: [Behavioral-Finance] 111th month newsletter
To: Behavioral-Finance@yahoogroups.com
Date: Monday, July 6, 2009, 9:44 AM

Hi, dear members and visitors!
Here is your 111th month newsletter.

1) Monthly activity

The total of non bouncing members inches up (+5) at 1830.

There were very few new messages (15) reaching a total of 8835.

Still no idea of a topic that would move the masses?
I was asked about the "philosophy of money" in another
site. Not easy to determine the philosophy of something that
is just a tool. A mundane tool.
But a strange tool, an abstract / immetarial one, a multipurpose
one (the Swiss army knife of the economy).
Its value is no more directly based on anything material, but on
a chain of commitments (between depositors, banks, borrowers,
central banks, states...).
Maybe it is more than just a tool?
With cultural and symbolic aspects added?
And itself a social link?
With huge embedded powers? With associated ethical traits that
make it either deified or demonized?
With links to time and space (time is money and trusted money is
accepted everywhere)?
How do you see it?

Membership in our Finance-Academy is stable ar 360.
http://finance. groups.yahoo. com/group/ Finance-Academy/

2) Our free BF resources at your fingertips 24/7:

* Your diligently maintained and improved BF glossary.
500+ definitions, many of them as stand-alone detailed
encyclopedic articles,
http://pagesperso- orange.fr/ pgreenfinch/ bfglo/bfglo. a.htm
=> Our permanent "quality" poll about that resource is running at:
http://finance. groups.yahoo. com/group/ Behavioral- Finance/polls
*** Thanks for your opinion !! ***

* Martin Sewell's academic treasure chest in BF topics,
that site is a must for students and researchers:
http://www.behaviou ralfinance. net/

* Your behavioral stockpricer:
http://pagesperso- orange.fr/ pgreenfinch/ pricer.htm

* Our group charter
http://finance. groups.yahoo. com/group/ Behavioral- Finance/files/
(click BF Group charter.doc)
also available at:
http://pagesperso- orange.fr/ pgreenfinch/ befigrouppolicy. htm

** Remember, you need a *yahoo ID/profile* to access all
Yahoo group's resources (polls, links and files).
To get it, click "account info" (in the group's homepage
or your "my groups" page) and fill in the info you deem
appropriate. ID-less members are permanently moderated..

Anticipating good info and debates in this new month.
Best regards

Peter