A Crash Course in Behavioral Finance

August 2010

Behavioral Finance - A Crash Course.
What every advisor should know.

Ever wonder why clients are much more distressed by losses than they are happy about gains? Or why many will refuse to sell a stock for less than they paid for it, no matter how far the stock price tumbles? Or why the simple act of setting up a Donor Advised Fund makes it more likely that the donor will continue to make annual grants from the fund?

In a new white paper published jointly with Beth Milkovits, Director of Development for The Boston Foundation, Federal Street Principal Randy Hustvedt offers an entertaining introduction to the world of Behavioral Finance, an area of her long-term interest and study.

Click through for a fun and worthwhile read.

Are You Hooked Yet?

If you're like us, even a taste of this subject leaves us hungry to learn more. Who among us doesn't want to be a more rational investor - and better advisor? Over the years, we've collected the best books on this fascinating topic.

Click through to our Reading List, annotated by Randy Hustvedt.

Learn why
concepts like
Anchoring
Prospect Theory Mental Accounting & Overconfidence
are challenging the conventional wisdom that markets are efficient and investors are rational.

Book Picks
The Upside of Irrationality, the sequel to Ariely's classic, will further convince you that humans are not programmed to be rational.

FEDERAL STREET ADVISORS www.federalstreet.com 617-350-8999
Providing conflict free investment consulting and wealth advisory services to individuals and nonprofits, with particular expertise in: Customized Portfolio Design, Alternative Investments, Socially Responsible Investing, Philanthropy, Endowments & Foundations and Working With Complex Families.