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Behavioral Finance and the Psychology of Investing

The rational man—like the Loch Ness monster—is sighted often, but photographed rarely.

—DAVID DREMAN, 19981

The market is most dangerous when it looks best; it is most inviting when it looks worst.

—FRANK J. WILLIAMS, 19302

This book is filled with data, figures, and charts that support an internationally diversified, long-term strategy for stock investors. Yet advice is much easier to take in theory than to put in practice. The finance profession is increasingly aware that psychological factors can thwart rational analysis and prevent investors from achieving the best results. The study of these psychological factors has burgeoned into the field of behavioral finance.

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