As financial planners and wealth managers dedicated to guiding our clients toward informed and rational investment decisions, we recently enjoyed a team book study reading “The Behavioral Investor” by Daniel Crosby. This insightful book takes a deep dive into the often-overlooked realm of behavioral finance, shedding light on the psychological underpinnings that shape our financial choices. More and more in recent years the field and study of behavioral finance is gaining significant traction, even having a place in the Certified Financial Planner® curriculum. We’ve discussed this topic in past newsletters and blogs, and recently recorded a podcast episode that will be released in the coming weeks.

We believe it is important to be aware of these behavioral and emotional biases so that it helps lead to less irrational decisions and better financial outcomes. The book provides real-world case studies to help bring different investor behaviors to life so that readers can learn from someone else’s mistakes instead of real, personal mistakes. Before getting into specifics about portfolio construction and risk management, the book takes a peek at general human nature and how the brain works when it comes risk and emotion.

In addition to behavioral biases the author describes different types of risks but considers the greatest risk to be behavioral risk because it cannot be accounted for or managed successfully without understanding and being aware of it. Hence our continued study of this area of investment management.

Crosby’s exploration of behavioral finance is both eye-opening and immensely relevant. He skillfully unravels the biases that can lead investors astray, providing a compelling case for the importance of understanding one’s own psychological tendencies. From overconfidence to fear-driven decision-making, Crosby’s insights resonate with the experiences of investors at every level.

In a world often dominated by short-term thinking, the book encourages a long-term perspective on investing. By addressing the behavioral challenges that investors face, Crosby advocates for a patient and disciplined approach to wealth management, which aligns well with sound financial planning principles that our firm believes to be timeless and true.

As a wealth management firm committed to delivering excellence, the insights gained from “The Behavioral Investor” are valuable. This book serves as more than just a personal guide—it’s a strategic resource and reference that will remain within easy reach on the bookshelf and revisited often.

February 22, 2024

The Psychology Behind the Art and Science of Investment Management

As financial planners and wealth managers dedicated to guiding our clients toward informed and rational investment decisions, we recently enjoyed a team book study reading “The […]
October 16, 2023

Market Update | October 16, 2023

There is a horrific situation unfolding in Israel. The devastating terrorist attacks have already cost thousands of lives and may profoundly affect the region. While the […]
December 13, 2022

What’s Going on in Washington?

This summer Congress passed a healthy amount of legislation with the Inflation Reduction Act being the headliner in August. The bill cleared the Senate through the […]
August 2, 2022

Quarter Review

If you follow the news headlines then it probably comes as no surprise that the included chart is filled with an unfortunate amount of negative/red numbers. […]
May 19, 2022

Behavioral Finance & Investing

Behavioral finance is the application of psychology to understanding financial behavior and its effect on portfolios and markets. Whereas traditional economic theory assumes people always make […]
February 25, 2022

State of the Firm

We’re full steam ahead into 2022! It almost doesn’t seem possible as I write this and reflect on the past year, but nonetheless here we are […]
August 26, 2021

Defining the Proper Amount of Risk

In his book “Simple Wealth, Inevitable Wealth” Nick Murray makes two assessments related to risk that I believe the average investor is guilty of: 1) People […]
May 20, 2021
Dollar Bills

National “Be a Millionaire Day”

The word millionaire carries several connotations with it, ranging from wealth, status, and financial freedom to philanthropy, luck, hard work, and even stress. Regardless of the feelings that the word millionaire evokes for you, it’s likely different for someone else. Everyone’s definition of wealth is different.
November 2, 2020

Presidential Tax Proposals: Thoughtful Planning Wins, No Matter Who Does

Voter polls and betting markets at the time of this writing (late September) suggest that Joe Biden is favored to win the 2020 presidential election. One […]
July 13, 2020

Mask Mandate Effective July 13, 2020

Out of concern for our employees, friends, and community, BCS Wealth Management issued a mask mandate beginning July 13, 2020. Employees and visitors, which includes clients, […]
Form ADV Part 2A
Form CRS