Behavioral finance is useful only if it can be applied to help people make better decisions. This chapter offers reflections on the good, bad, and ugly of practical applications of behavioral finance in a commercial banking setting. It explores the difficulties of nonexperts experimenting with...

The future of behavioral finance necessitates that the research areas of behavioral corporate finance and investor psychology develop richer models of financial decision-making behavior. Behavioral corporate finance requires expanding the focus from chief executive officer characteristics to...

This chapter reviews various behavioral concepts and strategies to help clients avoid behavioral errors, with the result of increasing the probability of a successful plan design and implementation. The chapter discusses how the concepts introduced by research in behavioral finance have become...

This chapter examines high-frequency trading (HFT), including core groups of strategies and resulting impacts. Using order-by-order market data analysis, the chapter shows that much of what is often construed to be useless noise of order cancellations actually represents meaningful order...

Stock market anomalies representing the predictability of cross-sectional stock returns are one of most controversial topics in financial economic research. This chapter reviews several well-documented and pervasive anomalies in the literature, including investment-related anomalies, value...

Although the efficient market hypothesis (EMH) is the leading theory describing the behavior of financial markets, researchers have increasingly questioned its efficacy since the 1980s because of its inconsistencies with empirical evidence. This challenge to EMH has resulted in the development...

This chapter examines different psychological biases pertinent to collecting art and other items, which are part of every client's world to some degree. Wealth management has a tradition of management by silo, each guided by its own revenue stream. Yet, the chapter shows how financial advisors...

The worldwide landscape of merger and acquisition (M&A) activity has changed dramatically in the past decade. Acquirers, acquisition trends, and the strategies behind those transactions now differ dramatically. Acquisition success rates also appear to be different, with recent research...

Investors are inextricably linked to financial institutions, money managers, and the products they market. Mutual funds, exchange-traded funds (ETFs), hedge funds, and pension funds manage or hold roughly $55 trillion in combined wealth. This chapter examines these topics with a behavioral...

Asset allocation models have evolved in complexity with the development of modern portfolio theory, but they continue to operate under the assumption of investor rationality and other assumptions that do not hold in the real world. For this reason, academics and industry professionals make...