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Behavioral Finances versus Technical and Fundamental Analysis

Author

Listed:
  • Adrian Mitroi
  • Ion Stancu

    (Academy of Economic Studies, Bucharest)

Abstract

Although the field of modern finance has progressed impressively, it is still hard to explain on a scientific basis why people behave nonrationally when dealing with money. The classic finance assumes people rationalize and optimize their financial decisions. Behavioral Finance adds the importance of what investors should do and complements the mantra of classic finance with what people actually do, in terms of economic decisions. The new field of Neuroeconomy investigates the subtle and profound interactions within the human brain when faced with uncertainties of an economic decision. The most basic psychological traits of human being (fear, anger, greed and altruism) stamp an indelible mark on our decisions about money. The intellect (understanding a situation), reason (long term consequences of the contemplated action) and emotion (the judge of the course of action) are all intercorrelated resorts behind human decision making.

Suggested Citation

  • Adrian Mitroi & Ion Stancu, 2007. "Behavioral Finances versus Technical and Fundamental Analysis," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 1(1(506)), January.
    • Handle: RePEc:agr:journl:v:1(506):y:2007:i:1(506):p:
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