I recently had the opportunity to interview Meir Statman, author of the new book What Investors Really Want, and a professor of finance at Santa Clara University in California. Professor Statman is one of the world’s leading experts in behavioural finance, and his new book explores the ways that our emotions and desires affect the way we invest.
In a series of posts this week and next, I’d like to take a detailed look at some of the ideas that Prof. Statman and I discussed. At the end of the series, I’ll announce a contest where readers can win a copy of What Investors Really Want to add to their own financial library.
Let’s open with one of the main ideas that Statman introduces in the book. Why do we invest? The answer may seem obvious: to build a retirement nest egg, or a college fund for our kids, or for some other specific financial goal. But our desires go beyond these utilitarian benefits. Statman explains that we also get expressive and emotional benefits from investing. For example, active investors savour the thrill of trying to beat the market,