Value Investing and Behavioral Finance: Insights into Indian Stock Market Realities 9780070077638, 0070077630
3,486 201 8MB
English Pages [356] Year 2009
Table of contents :
Cover
Contents
Chapter 1: Success and Failure
1.1 Why People Fail
1.2 Characteristics of Human Nature
1.3 We Strive For
1.4 Unwillingness to Delay Gratification
1.5 Success
1.6 Conclusion
Chapter 2: Understanding Behavioral Trends
2.1 The Evidence on Equity Returns
2.2 Sources of Returns
2.3 Hypothetical Study: Growth in Earnings
2.4 Making Sense Out of Sensex
2.5 Key Lessons
2.6 Successful Investing
2.7 Conclusion
Chapter 3: Behavioral Obstacles to Value Investing
3.1 Behavioral Finance
3.2 Asset Allocation and Risk Aversion
3.3 Investment Styles
3.4 Returns
Chapter 4: Contrarian Investing: The Psychology of Going Against the Crowd
4.1 What is Contrarian Investing?
4.2 Why is Contrarian Investing Difficult to Follow?
4.3 Empirical Study: Conventional versus Contrarian Portfolio
4.4 Case Study: VST Industries—A Blossom in the Desert
Chapter 5: Growth Trap
5.1 Introduction
5.2 Behavioral Anomalies Behind Investors Chasing Fads and Fancies
5.3 Starting of the Indian Equity Cult
5.4 Long-Term Stock Returns
5.5 Examples of Growth Trap
5.6 Differentiating between Good Investment and Good Business
5.7 What does the Evidence Suggest?
5.8 Lessons for Investors
5.9 Conclusion
Chapter 6: Commodity Investing
6.1 Commodity Stocks
6.2 Behavioral Biases
6.3 Valuation Parameters
6.4 The Paradox: Conventional Thinking Does Not Hold True
6.5 Sugar: A Case Study of Low-Cost versus High-Cost Producers
6.6 Key Differentiating Factors
6.7 Commodity Cycles
6.8 Stock Market Triggers
6.9 Conclusion
Chapter 7: Public Sector Units
7.1 Introduction
7.2 Perception of Stock Market
7.3 Divestment Process
7.4 Behavioral Anomalies
7.5 Discounting the Positives
7.6 Size Matters
7.7 So Do the Returns
7.8 Serving Capitalism
7.9 Conclusion
Chapter 8: Sector Investing
8.1 Introduction
8.2 Top-Down Approach
8.3 Behavioral Traits
8.4 Sector Bubble
8.5 Sector Analysis
8.6 Sector Growth Effect
8.7 Lessons for Investors
8.8 Conclusion
Chapter 9: Initial Public Offerings
9.1 The Lure of the New
9.2 The Indian IPO Scenario
9.3 The Economics of an IPO
9.4 The Initial Risk-Takers
9.5 Psychological Errors
9.6 Investor Heuristic
9.7 Understanding the IPO Phenomena
9.8 Conclusion
Chapter 10: Index Investing
10.1 Introduction
10.2 The Essence of Continuity and Discontinuity
10.3 Is it Possible?
10.4 Stock Market Behavior
10.5 What is Index Investing?
10.6 Why do Investors go for Index Investing?
10.7 Evidence Suggests the Contrary
10.8 Lessons for Investors
10.9 Conclusion
Chapter 11: Bubble Trap
11.1 Anatomy of Financial Crisis
11.2 How is a Bubble Formed?
11.3 Human Behavioral Anomalies
11.4 How does One Identify a Bubble?
11.5 Lessons for Investors
11.6 Why do Past Bubbles not Guide Us?
11.7 Conclusion
Chapter 12: Investor Behavior Based Finance
12.1 Behavioral Finance
12.2 Stock Price
12.3 Role of the Owners: Investors
12.4 Corporate Behavior
12.5 Investor Behavior Based Finance
12.6 Paradigm Shift: Research on Investor Behavior
12.7 A Case Study of Investor Behavior Based Finance
12.8 Estimating Stock Price Movement: A Case Study
12.9 Conclusion
Bibliography
Glossary
Index
