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From The Classical Finance To The Behavioral Finance

Author

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  • Titus SUCIU

    (Transilvania University, titus_suciu68@yahoo.com, Brasov, Romania,)

Abstract

This paper represents a starting point in the presentation of thethree types of stock-market analysis: the technical analysis, the fundamental analysis and the behavioral finance. The fundamental analysis consists in the assessment of the financial and economic status of the company, together with the context and macroeconomic environment where it activates. The technical analysis deals with the demand and supply of securities and the evolution of their trend on the market, using a range of graphics and charts to illustrate the market tendencies for the quick identification of the best moments to buy or sell. Behavioural finance takes into account the human factor, through the perception, own evaluation and emotional elements, which are involved into taking and undertaking an investitional decision. The theory looks at the irrational human tendency to quickly achieve profits by selling the title and to postpone accepting losses by preserving the asset. Investors focus on the likelihood that their decisions might trigger gains or losses as compared to the status quo which is set based on prevailing personal perception rather than on the impact of this decision on the entire portfolio. The fusion between classical financial analysis and behavioural finance can help investors and financial analysts to better understand the market mechanism of functioning as well as the investment behaviour of the stakeholders to this process.

Suggested Citation

  • Titus SUCIU, 2015. "From The Classical Finance To The Behavioral Finance," Journal of Public Administration, Finance and Law, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 7(7), pages 80-88, June.
    • Handle: RePEc:aic:jopafl:y:2015:v:7:p:80-88
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    Cited by:

    1. Amare Abawa Esubalew & A. Raghurama, 2021. "The moderating effect of size on the relationship between commercial banks financing and the performance of micro, small, and medium enterprises (MSMEs)," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 11(1), pages 1-14, December.
    2. Naga Pillada & Sangeetha Rangasamy, 2023. "An empirical investigation of investor sentiment and volatility of realty sector market in India: an application of the DCC–GARCH model," SN Business & Economics, Springer, vol. 3(2), pages 1-16, February.

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