Dr. Daniel Crosby provides a practical approach to behavioral finance in his highly anticipated new book, The Laws of Wealth: Psychology and the secret to investing success
Dr. Daniel Crosby is one of the preeminent behavioral psychologists in investing today, and it shows with this tour de force of how an investor can manage their wealth. With these few simple rules, investors can easily build a framework allowing them to thrive, even when their human instincts try to sabotage their investing. Get this book!
– Aaron Klein, CEO at Riskalyze
From New York Times and USA Today bestselling author, Dr Daniel Crosby, comes the behavioral finance book all investors have been waiting for.
In The Laws of Wealth, psychologist and behavioral finance expert Daniel Crosby provides an accessible and applied take on a discipline that has long tended toward theory at the expense of the practical. Readers are treated to real, actionable guidance as the promise of behavioral finance is realised and practical applications for everyday investors are delivered.
Dr Daniel Crosby said:
“Sixteen years after the ‘Tech Wreck’ of the turn of the century, the US stock market still sits below its 2000 values in real terms – welcome to the new normal. The last 20 years has seen two bubbles come and go, irreparably damaging the savings of small investors, and market valuations currently sit at levels that presage poor returns for the next 5 to 10 years. Add to this the fact that DALBAR and others have shown that investors keep only about half of what the market provides given their tendency to make emotional, short-sighted decisions. But just as surely as investor emotion can destroy returns, an appropriate understanding of market psychology can help investors thrive in the volatile days ahead.
In The Laws of Wealth: Psychology and the secret to investing success, I set forth a concrete vision for managing emotion, capitalizing on psychological mispricings and avoiding backbreaking bubbles. In Part One, I put forward The Ten Commandments of Investor Behavior, a comprehensive list of readily applicable truths for managing self. In Part Two, I outline the ways in which traditional approaches to active management have ignored psychology and how new approaches can improve returns, cut costs and avoid the long-term damage of market bubbles.”
In The Laws of Wealth, psychologist and behavioral finance expert Daniel Crosby offers an accessible and applied take on a discipline that has long tended toward theory at the expense of the practical. Readers are treated to real, actionable guidance as the promise of behavioral finance is realised and practical applications for everyday investors are delivered.
Crosby presents a framework of timeless principles for managing your behavior and your investing process. He begins by outlining ten rules that are the hallmarks of good investor behavior, including ‘Forecasting is for Weathermen’ and ‘If You’re Excited, It’s Probably a Bad Idea’. He then goes on to introduce a unique new taxonomy of behavioral investment risk that will enable investors and academics alike to understand behavioral risk in a newly coherent and complete way.
From here, attention turns to the four ways in which behavioral risk can be combatted and the five equity selection methods investors should harness to take advantage of behaviorally-induced opportunities in the stock market. Throughout, readers are treated to anecdotes, research and graphics that illustrate the lessons in memorable ways. And in highly valuable ‘What now?’ summaries at the end of each chapter, Crosby provides clear, concise direction on what investors should think, ask and do to benefit from the behavioral research.
Dr. Crosby’s training as a clinical psychologist and work as an asset manager provide a unique vantage and result in a book that breaks new ground in behavioral finance. You need to follow the laws of wealth to manage your behavior and improve your investing process!
