One of the traditional building blocks of efficient markets – the assumption of rational investors – has now been seriously questioned since the emergence of behavioural finance as an accepted discipline. Are the two approaches mutually exclusive or not? This workshop will endeavour to bridge the divide.
Having attended this course, delegates will gain an insight into a subject matter area which has now become accepted as highly relevant and mainstream in terms of understanding the behaviour of market participants today, and which is also now part of the investment curriculum followed by those pursuing professional financial qualifications in the future.
Course Content:
The role of any market? Price discovery. Why might this not be straightforward?
The assumptions behind efficient market theory.
Investors are 'rational & risk averse'
If investors are not always rational, why? A look at Twitter's peak valuation
Orderly vs disorderly markets
Is the glass half full or half empty? It depends who you ask
Traditional economic theory v behavioural finance
Prospect theory
Fear of regret
Heuristics
Cognitive illusions – anchoring & extrapolation, representatives
Misconceptions of randomness
Base rate neglect
The anatomy of bubbles – herd mentality
This course is delivered through the BPP online classroom. Please contact ci-pd@bpp.com with any queries.
