Ryan Paterson: Using behavioural finance to take control of investments

"The investor's chief problem - and even his worst enemy - is likely to be himself." Benjamin Graham Traditional finance is based on rational and logical theories, such as the capital asset pricing model (a model that describes the relationship between market risk and expected return for assets) and the efficient market hypothesis (a theory in financial economics that states an asset's price fully reflects all available information). These theories assume investors are rational, which means they make decisions that maximise utility and revise their expectations in a manner consiste...