Personal Benchmark E-Book

Charles Widger

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 441

Veröffentlichungsjahr: 2014

Beschreibung

In Personal Benchmark: Integrating Behavioral Finance and Investment Management, Chuck Widger and Dr. Daniel Crosby outline the ways in which a program of embedded behavioral finance, fueled by what matters most to you, can be your protection against irrational financial behavior. Along the way, you'll learn how to improve your investment experience, increase returns formerly sacrificed to misbehavior, and worry less about "The Economy" as you become increasingly focused on "My Economy." Welcome to a new way of investing, a new paradigm for conceptualizing wealth, and a system of turning emotion from your portfolio's worst enemy into its best friend! In this new model, risk is simply the likelihood that we will underperform our dreams. Irrationality is acting in ways that thwart our ability to reach those dreams. And the optimal portfolio is not the one that generates the highest return in abstraction, it is the one that helps us meet our goals without killing our nerves before we get there. This book gives advisors the tools needed to effectively communicate the design and execution of the Personal Benchmark solution.

Leseprobe

CONTENTS

Cover

Title Page

Copyright

Dedication

Preface

A Strategy

A Behavioral View of Finance

Personal Benchmark: A Tool for Advisors

Some Acknowledgments

References

Introduction

References

Part 1: Why Do We Need to Look at Investing Differently?

Chapter 1: Freedom in the Market and Advisor Responsibility

The Financial Markets

What We've Been Up to as Advisors

What Investors Really Want and Need

A New Investment Advice Delivery System

Brinker Capital and Personal Benchmark

Summary

References

Chapter 2: Investor Emotions and Financial Decisions

The Origins and Evolution of Behavioral Finance

The Myths of Efficiency and Rationality

A Definition and Framework for Behavioral Finance

Summary

References

Chapter 3: Risk, This Time It's Personal

Fallacy 1: Risk and Return Are Systematically Correlated

Fallacy 2: Investors Have a Single, Static Level of Risk Tolerance

Fallacy 3: One Man's Risk Is Another Man's Reasonable Probability

Behavioral Risk and You

Summary

References

Part 2: What Is the Personal Benchmark Approach?

Chapter 4: Brinker Capital's Multi-Asset Class Investment Philosophy

A Brief History of Investing

Our Multi-Asset Class Investment Philosophy

Applying Our Philosophy

Implementing Our Philosophy

Summary

References

Chapter 5: The Power of Buckets

Intentional Framing

Framing with Purpose

Mental Accounting for Increased Rationality

Goals-Based Mental Accounts: A Case Study

Summary

References

Chapter 6: Selection of an Active Investment Manager

Passive versus Active Management

The Successful Investment Firm

The Successful Investment Manager

An Effective Investment Management Process

Monitoring and Assessing Performance

Summary

References

Part 3: How Can We Execute a Purpose-Driven Investment Strategy?

Chapter 7: Using a Goals-Based Approach

The Allure of Determinism in Economics and Psychology

The Economy of One

Our Inner Demons: A Field Guide

Let Your “Why” Teach You “How”

Summary

References

Chapter 8: Pursuing Your Personal Benchmark

The Difference a Frame Makes

Limitations in Our Decision Making

The Joneses, Jealousy, and Missteps

The Anatomy of Better Decisions

Summary

References

Chapter 9: Providing an Easy-to-Understand Explanation

Your Best Investment

Once More, with Feeling

Changing the Conversation

The Brinker Capital Personal Benchmark Solution

Summary

References

Chapter 10: Leveraging a Scalable Offering for Investors and Advisors

Using Personal Benchmark

Reaping Benefits for Advisors

Summary

Conclusion

About the Authors

About the Companion Website

Index

End User License Agreement

List of Tables

Table 3.1

Table 4.1

Table 4.2

Table 4.3

Table 4.4

Table 4.5

Table 4.6

Table 4.7

Table 4.8

Table 4.9

Table 6.1

Table P.1

Table P.2

List of Illustrations

Figure C.1

Figure 1.1

Figure 1.2

Figure 1.3

Figure 1.4

Figure 1.5

Figure 1.6

Figure 1.7

Figure 1.8

Figure 1.9

Figure 1.10

Figure 1.11

Figure 1.12

Figure 1.13

Figure 1.14

Figure 1.15

Figure 4.1

Figure 4.2

Figure 4.3

Figure 4.4

Figure 4.5

Figure 4.6

Figure 4.7

Figure 4.8

Figure 4.9

Figure 4.10

Figure 4.11

Figure 4.12

Figure 5.1

Figure 5.2

Figure 5.3

Figure 6.1

Figure 8.1

Figure 8.2

Figure 9.1

Figure 9.2

Figure 9.3

Figure 9.4

Figure 9.5

Figure 9.6

Figure 9.7

Figure 9.8

Figure 9.9

Figure 9.10

Figure 9.11

Figure 9.12

Figure 9.13

Figure 9.14

Figure 9.15

Figure 9.16

Figure 10.1

Figure 10.2

Figure 10.3

Figure 10.4

Figure 10.5

Figure 10.6

Figure 10.7

Figure 10.8

Figure 10.9

Figure 10.10

Figure 10.11

Figure 10.12

Figure 10.13

Figure 10.14

Figure 10.15

Figure 10.16

Figure 10.17

Figure 10.18

Figure 10.19

Guide

Cover

Table of Contents

PrefaceA StrategyA Behavioral View of FinancePersonal Benchmark: A Tool for AdvisorsSome AcknowledgmentsReferences

Part 1

Chapter 1

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Personal Benchmark

Integrating Behavioral Finance and Investment Management

Chuck Widger

Dr. Daniel Crosby

Cover design: Wiley

Copyright © 2014 by Chuck Widger and Dr. Daniel Crosby. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, [phone], fax [phone], or on the Web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, [phone], fax [phone], or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

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Library of Congress Cataloging-in-Publication Data:

Widger, Chuck.

Personal benchmark: integrating behavioral finance and investment management/Chuck Widger and Dr. Daniel Crosby.

pages cm

Includes bibliographical references and index.

ISBN 978-1-118-96332-6 (hardcover); ISBN 978-1-118-96339-5 (ePDF); ISBN 978-1-118-96333-3 (ePub)

1. Investment advisors. 2. Investment advisor-client relationships. 3. Finance–Psychological aspects. 4. Portfolio management–Psychological aspects. I. Crosby, Daniel, 1979- II. Title.

HG4621.W46 2014

332.601′9–dc23

2014020577

Dedication

This book is dedicated to America's advisors.Professionals who help investors achieve their goals.

Preface

The insight that inspired this book emerged in the spring of 2010 during an otherwise typical investment advisory discussion. My client, Rick, had investment needs. Like many investors, he wanted a conservative approach (low volatility) to managing his investments. Also like many investors, he simultaneously needed growth to increase his purchasing power. An inherent conflict. Thus, Rick called me to seek guidance on how to assemble a portfolio that would best meet his goals.

But Rick wasn't just any client. Rick was my longtime friend of more than 55 years. In the eighth grade, we played soccer together. In high school, we (along with our teammates) won the 1962 Pennsylvania State Championship. June 3, 1967, we entered Navy officer candidate school in Newport, Rhode Island together.

In 1970, I left active duty to join the finance industry. Rick went on to become a career Naval officer, rising to the rank of Captain in the Naval Supply Corp and earning a master's degree in computer science at the Navy's postgraduate school in Monterey, California along the way. He also prudently saved and invested his entire adult life.