Stop. Think. Invest.: A Behavioral Finance Framework for Optimizing Investment Portfolios

by Michael Bailey

Overview

Use the power of behavioral finance to make smarter, better-informed decisions through every step of the investing process

In an economy where markets are more unpredictable than ever, emotions can derail the efforts of even the most experienced investors and wreak havoc on portfolio returns.

Applying powerful behavioral finance concepts, Stop. Think. Invest. provides a framework for identifying personal biases and avoiding mistakes that can cost big profits. Based on the author’s extensive research and 100 key behavioral finance concepts, this guide provides a winning 12-step process you can use to successfully manage your trading and investing for long-term success, including:

• Begin the initial research into a new stock
• Create an investment thesis—why are you buying the stock?
• Trade timing and size—when are you buying and how much?
• Make the initial purchase
• Review the trade—round up or round down
• Test your original investment thesis

Stop. Think. Invest. reveals critical information about behavioral finance flaws, such as anchoring, confirmation bias, recency bias, and loss aversion.

Unlike other behavioral investing guides, Stop. Think. Invest. offers a fully organized and practical approach to applying behavioral finance to everyday investing.

Product Details

ISBN-13:	9781264268382
Publisher:	McGraw Hill LLC
Publication date:	01/27/2022
Pages:	272
Sales rank:	1,112,721
Product dimensions:	6.10(w) x 9.10(h) x 1.20(d)

About the Author

Michael Bailey, CFA, is Director of Research and Investment Committee Chair for FBB Capital Partners, a boutique Washington, D.C., investing firm with $1.4 billion assets under management, as of 12/31/2020. Bailey created and launched an investment strategy for managing a portfolio of stocks with high environmental, social, and governmental metrics. He served as principal and equity research analyst for Legg Mason and held positions at Bear Sterns and Raymond James.

Table of Contents

Preface vii

Introduction xxiii

Acknowledgments xxxiii

1 Explore a Brand New Idea or Theme 1

2 Begin Initial Research 29

3 Complete the Research Process 39

4 Craft an Investment Thesis 67

5 Decide on Timing and Sizing of Trade 85

6 Make Initial Purchase 105

7 Analyze Early Results and Stock Movement 111

8 Consider a Follow-on Trade 125

9 Execute a Follow-on Trade 147

10 Review Long-Term Investment Thesis 157

11 Evaluate a Complete Sale 171

12 Sell and Focus on Continuous Improvement 185

Epilogue 207

Notes 211

Index 225