At the top of every financial advisor’s reading list should be Meir Statman’s “What Investors Really Want: Discover What Drives Investor Behavior and Make Smarter Financial Decisions” (McGraw-Hill, 2011).
Statman writes with the flair of a best-selling author and the authority of a behavioral finance expert. His elegant premise, “investors are not rational, they are normal,” will confound advisors who have been conditioned to believe the opposite.
Settle in for an engaging read about individual investor psychology and motivations. Investors seek the same emotional satisfactions they get from shopping for shoes and or a new car. Statman identifies and expands on the utilitarian, expressive and emotional benefits investors derive from their portfolios to enhance not only their wealth, but also to express their taste, status and values.
Behavioral finance is not new. What is new is Statman’s fresh approach, which moves the insights and lessons of behavioral finance from esoteric to actionable.