KSY322: Investment Psychology: Transforming Your Mindset for Financial Victory

Leaarning Outcomes

1. Outline the investment psychology that affect investment decisions.

2. Identify the key biases that lead investors to make faulty investment decisions.

3. Illustrate how overconfidence leads investors to form biased judgments about the market risk premium; and

4. Formulate selling such as the time of selling an investors stock, the amount to be sold and the type of stock to be sold.

Course Contents

• Understanding the Psychological Forces Behind Investment Behaviour

- Introduction to Behavioural Finance- Cognitive Biases and Heuristics- Emotions in Investing- Case Studies: Real-world examples of how psychological factors have led to significant market movements and investment outcomes.

• Uncovering and Mitigating Common Investor Biases

- Anchoring and Adjustment- Loss Aversion and Regret- Confirmation Bias- Herding Behaviour

• The Perils of Overconfidence in Investment Decisions

- Defining Overconfidence in Investing- Overestimating Knowledge and Control- Impact on Market Risk Premium- Case Studies: Examination of historical market bubbles and crashes fuelled by investor overconfidence.

• Crafting an Effective Selling Strategy to Maximize Returns

- The Psychology of Selling- Timing the Market- Determining the Quantity to Sell- Selecting Which Stocks to Sell