What is Investor Psychology?

What is Investor Psychology?

Investor Psychology is about the behavior of investors; what they believe, how they act, what they do.

Behavior Finance is a theory of finance that attempts to explain the decisions of investors by viewing them as rational actors looking out for their self-interest, given the sometimes inefficient nature of the market.

The study of Investor Psychology is about understanding the individual investors’ shortcomings in how they feel about the markets and why they may do the wrong thing at the wrong time.