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Introduction to Behavioural Finance (Brain Teaser)
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COMPANY OVERVIEW
PearlMutual Consulting Ltd (‘PearlMutual’ or ‘the Company’) is a business advisory firm
Established in September 2009 by a group of consultants with over 20 years of joint work experience in leading consulting/advisory services firms.
PearlMutual’s head office is located in Lekki, Lagos.
PearlCon Training © 2013
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COMPANY OVERVIEW
Our Mission
To help our clients turn their business challenges into business performance enablers
Our Vision
To be one of the leading consulting firm in Africa
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OUR BRAND VALUES
Innovation
Partnership
Excellence
Accountability
Reliability
Leadership
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OUR SERVICES
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CAPACITY DEVELOPMENT
PearlCon Training is our training division
We work in alliance with other professionals in delivering quality training courses.
We offer only top of the range courses at affordable costs
We train staff on various topics and issues including soft and technical skills
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SAMPLE CLIENT EXPERIENCE
PearlCon Training has successfully organized training in the past.
Testimonials from the participants also indicate the effectiveness of our training methodology
Key members of our team have been training the staff of several reputable organizations in Nigeria for several years under the auspices of other training outfits
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OUR TRAINING COURSES
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Treasury
Finance
Project Mgt
Risk Mgt
Asset Mgt
Management Development
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FACULTY PROFILE
Olufunmi Adepoju, CFA, CRA, ACA, BSc
Managing Partner
Vast work experience CFA® charter holder
Certified Risk Analyst
Training and education instructor
Chartered Accountant (ACA)
B.Sc. Accounting (University of Ilorin)
Content developer
Financial analyst
Financial Planner
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FACULTY PROFILE
Tolu Akindele, CFA, M.SC., B.SC
She currently works with GroFin Nig Limited
Tolu is a CFA Charter holder.
Offers business support in finance, operations, sales and marketing
Facilitates courses on business plan writing, positioning small business to access funding
Worked with EcoBank in business development and income generation
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FACULTY PROFILE
Olubunmi Abimbola Omose, FCA, B.SC
She is a chartered accountant
A management consultant
Over twenty years work experience
A seasoned trainer
Core skill area includes audit, tax, and business advisory
Worked with reputable organizations like Accenture, Agusto & Co, Equitorial Trust Bank, and Cornerstone Insurance
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FACULTY PROFILE
Charles Nyamali, CIMA, ACA, MSC, B.SC
He is a qualified accountant
An associate member of the chartered institute of management accountant
He is a credit analyst
A seasoned trainer
Over fifteen years work experience
Worked with First Bank as a senior manager in their credit risk management department
Also worked with Agusto & Co as senior analyst strategic business research unit
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TRAINING PACKAGE
The participants shall receive the following items:
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Session Plan PowerPoint Slides / CDs
Activities/videos Case Studies
Workbooks Complete writing materials
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DEFINITION OF BEHAVIOURAL FINANCE
An application of psychology to finance
Attempts to understand and explain observed investor and market behaviours
Could be
Micro
Examines individual investors
Macro
Considers aggregate market anomalies
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Behavioural finance
Does not assume that people are rational
Does not assume that people consider all available information in decision making
Does not assume that markets are efficient
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DEFINITION OF BEHAVIOURAL FINANCE
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WHY EMBRACE BEHAVIOURAL FINANCE?
Fundamental Anomalies
Technical anomalies
Calendar anomalies
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WHY EMBRACE BEHAVIOURAL FINANCE?
Calendar anomaly is an irregularity identified when patterns of trading behaviour that occur at certain times of the year are considered.
The January effect: Stocks in general have delivered abnormally high returns during the month of January.
The turn-of –the-month effect: Stocks earn higher returns on the last day and first four days of each month.
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CATEGORIZATIONS OF BEHAVIOURAL BIASES
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Cognitive Errors
Emotional Biases
Behavioural Biases
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COGNITIVE ERRORS
Cognitive errors may be considered the result of faulty reasoning.
Cognitive errors stem from: Basic statistical
Information-processing
Memory errors
Cognitive errors are easy to correct.
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COGNITIVE ERRORS
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EMOTIONAL BIASES
Emotional Biases may be considered to result from reasoning influenced by feelings
Emotional biases may stem from impulse, intuition or arise spontaneously
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EMOTIONAL BIASES
Loss-aversion bias
Overconfidence bias
Self control bias
Status quo bias
Endowment bias
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INVESTOR TYPES
Investor Types
The Adventurer
The Celebrity
The Individualist
The Guardian
The Straight Arrow
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INVESTOR TYPES
The Adventurer
Hold high undiversified portfolio
Confident
Impulsive
Take their own investment decision
Don’t like to take advice
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INVESTOR TYPES
The Celebrity
Centre of attention
Recognize their limitations
Seek advice about investing
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INVESTOR TYPES
The Individualist
Independent
Confident
Pleasant to advise
Listen and process information rationally
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INVESTOR TYPES
The Guardian
Cautious
Concern about future
Protection of assets
Seek advice from perceived knowledgeable
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INVESTOR TYPES
The Straight Arrow
Always Sensible
Love Security
Take risks with commensurate return
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SUMMARY
A practical integration of behavioural and traditional finance may lead to a better outcome than either approach used in isolation.
By understanding behavioural biases, financial market participants may be able to moderate or adapt to the biases and as a result improve upon economic outcomes.
Classifying investors into types is useful for providing insight and financial decision making but should be used with some caution.
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Training Invitation
For an in-depth knowledge of this topic, we hereby invite you to attend the full training:
Venue: Canton Concourse, V/Island
Date: 2nd – 4th September
Time: 3 days
Fees: N60,000
For enquiries on registration, call 08165789484 or E-mail us at [email protected]
For additional information about us, visit our website at www.pearlmutual.com
