Efficient Markets vs Behavioural Finance

Course Overview

One of the traditional building blocks of efficient markets — the assumption of rational investors — has now been seriously questioned since the emergence of behavioural finance as an accepted discipline. Participants explore this mainstream subject area, relevant to understanding market participants and to investment professional qualifications.

Course Content

• Efficient markets — but are they?
• The Capital Asset Pricing Model — still relevant today?
• What happened to risk-free investing?
• Betas and the search for alpha; smart beta
• What should we expect from equities? The lessons of history
• What is the correct equity risk premium now?
• An alternative narrative to explain today's markets — behavioural finance
• Markets go up slowly and down quickly — why is this?
• Is the glass half full or half empty? It depends who you ask
• Prospect theory, fear of regret, heuristics
• Cognitive illusions — anchoring and extrapolation, representativeness
• Misconceptions of randomness, base rate neglect
• The anatomy of bubbles — herd mentality

Duration

3 hours