Mental accountingis abehavioral economics conceptwhich refers to the different values a person places on the same amount of money, based on subjective criteria, often with detrimental results.
Simply put, it explainwhy people think less about some purchases than others?
Let see some real life example of mental accounting.
@elegant buffett:$Tesla (TSLA.US)$still a $4,400 stock price prior to the two stock splits since 2020. Not gonna let these stock splits foo me and it shouldn’t foo you either. There’s now 3.1 billion outstanding shares 😂 yea I’m waiting until $60-90 to call bottom
This week, we'd like to invite you to comment:What do you know about behavioral finance? How do you use it to reach your financial goal?
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Milk The Cow
:
Not really know about it. But Ahgaahga (estimation), I think know it . Different ppl placed the stock value differently. So, we compare with similar sectors to get the average multipler value = so we also Ahgaahga know the worth value of the stock, I guess +.
Syuee
:
I believe behavioural finance is indeed important and significant.
We are human beings, after all. We have human emotions and they are not the most helpful, when it comes to making good decisions around our trading / investing habits.
Most of the models that predict performance and earnings, fail to factor in human nature.
Behavior finance seeks to explain why some investors make the decisions that they do. It is essentially personal finance, at the macro economic level.
The reality is that every individual is a confluence of biases, emotions, influences and experiences.
All of these factors impact how we view the world and manage our own financial decisions.
This why some people are risk-takers while others are ultra conservative.
So it is not enough to only understand financial markets. One must also understand our own emotional processes, mental mistakes and individual personality traits as well.
If we understand that markets are irrational, and so are investors, then we can try to avoid the same pitfalls.
Having a good understanding of behavioural finance can actually help us to avoid emotion-driven speculation, leading to losses. Then, we can devise an appropriate and realistic long-term financial goal.
HuatEver
Syuee
:
With behaviour finance we can truly understand that not all financial participants, especially the investors will remain calm and rational during a market blood bath. Governed by the fear factor, investors may be negatively impacted and inevitably make irrational hasty decisions that results in great losses. Henceforth, I agree with your theory that besides understanding the market, one should be well geared psychologically.
HuatLady
Syuee
:
Generally, as human beings, investors may not perpectually avoid feelings of biases, greed, fear and worse of all the hard behaviour during their investments journey. It is therefore, of paramount importance for all investors/traders to have a better grip of such psychological impacts in order to make better investments choices. With this I would advocate a slow and steady approach in research of technicalities before the final decisions.
Mafiosa818 : yeah.. same as instead of putting money on stocks but losing all in casinos
Mr Trecherous :
Milk The Cow : Not really know about it.
But Ahgaahga (estimation), I think know it .
Different ppl placed the stock value differently.
So, we compare with similar sectors to get the average multipler value = so we also Ahgaahga know the worth value of the stock, I guess +.
Syuee : I believe behavioural finance is indeed important and significant.
We are human beings, after all. We have human emotions and they are not the most helpful, when it comes to making good decisions around our trading / investing habits.
Most of the models that predict performance and earnings, fail to factor in human nature.
Behavior finance seeks to explain why some investors make the decisions that they do. It is essentially personal finance, at the macro economic level.
The reality is that every individual is a confluence of biases, emotions, influences and experiences.
All of these factors impact how we view the world and manage our own financial decisions.
This why some people are risk-takers while others are ultra conservative.
So it is not enough to only understand financial markets. One must also understand our own emotional processes, mental mistakes and individual personality traits as well.
If we understand that markets are irrational, and so are investors, then we can try to avoid the same pitfalls.
Having a good understanding of behavioural finance can actually help us to avoid emotion-driven speculation, leading to losses. Then, we can devise an appropriate and realistic long-term financial goal.
#HowToBeEmotionless
#TheStruggleIsReal
KT88 Syuee :
KT88 Syuee :
KT88 Syuee :
HuatEver Syuee : With behaviour finance we can truly understand that not all financial participants, especially the investors will remain calm and rational during a market blood bath. Governed by the fear factor, investors may be negatively impacted and inevitably make irrational hasty decisions that results in great losses. Henceforth, I agree with your theory that besides understanding the market, one should be well geared psychologically.
HuatLady Syuee : Generally, as human beings, investors may not perpectually avoid feelings of biases, greed, fear and worse of all the hard behaviour during their investments journey. It is therefore, of paramount importance for all investors/traders to have a better grip of such psychological impacts in order to make better investments choices. With this I would advocate a slow and steady approach in research of technicalities before the final decisions.
Mr Trecherous :
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