If investor biases should be managed, investor preferences should be respected and re?ected in investment strategy, in so far as it is both feasible and sensible (after discussing the various issues with an invest­ment adviser).

There are two particular areas of investor preference that have been highlighted by behavioural ?nance. The ? rst (perhaps not surprisingly) is loss aversion, which in behavioural ?nance ?lls the role of risk aversion in traditional ?nance. The second is mental accounting, which re?ects the way in which investors assign sums of money to different actual or notional accounts for different purposes with varying degrees of risk tolerance depending upon the importance of achieving the particular objective. For example, an individual’s summer vacation money will be in a different mental account (and probably a different actual account) from pension savings.

When the economy condition is unpredictable and all prices of stuffs increasing with fast make every people become so worry about the future. Not just ordinary people who still confuse about their tomorrow but also the big company which has big asset as well. Every industry which has connection its business with international network got the negative effect on the financial condition. May be we heard some companies fire half of their employee to cut off their expenses and stay alive. If the big company got big hit of this global crisis, so what happened with the small company?

May be we will think that the small business will close their business even actually (more…)