Behavioral

FELIPE C. CONCEPCION JR.

Finance
ABIGAIL MAKIRAPTANAN
KESIAH PATULAY
MICA ELEMIEJAH DIZON
 Behavioral
Finance

ANOMALIES
OF What is
FINANCIAL Anomaly?
MARKET
 Behavioral
Finance

The deviation from

what is set as a
ANOMALY standard which is
being expected in
normal parlances.
 Behavioral
Finance

ANOMALY FRAUD
The deviation from wrongful or
what is set as a criminal deception
standard which is intended to result
being expected in in financial or
normal parlances.
personal gain.
 Behavioral
Finance

MARKET FUNDAMENTAL ANOMALY

ANOMALY CALENDAR ANOMALY

TECHNICAL ANOMALY
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Finance

-Fundamental
irregularities in stock
FUNDAMENTAL performance contradict
ANOMALY with the Efficient Market
Hypothesis.
-States that investors can
earn abnormal returns.
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Finance

Technical analysis
TECHNICAL encompasses that
security’s prices can be
ANOMALY forecasted by studying
the past prices.
 Behavioral
Finance

This anomaly can be seen

with reference to a
CALENDAR particular time. Some of the
specific periods are
ANOMALY weekend effect, turn on the
month effect, turn on the
year effect, January effect.
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Finance

JANUARY EFFECT Small poor-performing

smallcap stocks have
historically tended to go up
in January, whereas strong-
performing largecaps have
tended to rally in December.
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Finance

BUILDING
BLOCKS
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Finance

This is the mistake of

COGNITIVE BIAS processing information
in one’s own beliefs,
judgments and
preferences.
 Behavioral
Finance
Human minds are prone to
BEAVIORAL BIAS observations which are led by
filters of gained experiences.
These filters create biases in
judgment and decision making in
certain circumstances. The
decisions are backed by some
rule of thumb but not logics
which are also known as
‘heuristics’.
 Behavioral
Finance
OVERCONFIDENCE BIAS

COGNITIVE REPRESENTATIVE (GAMBLER FALLACY)

ANCHORING & ADJUSTMENT

BIAS COGNITIVE DISSORNANCE

ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
ANCHORING & ADJUSTMENT
 Behavioral
Finance

“Too many people overvalue what

they are not and undervalue what
they are.” - Malcolm S. Forbes
OVERCONFIDENCE
BIAS
Prediction Overconfidence:
Investors and traders assign their range of
expectation in a narrow framework.
Certainty Overconfidence
Traders become too certain for their predictions and if they
enter in a sure win sort of situation, It must be kept in the wall
of mind that investing is a crucial exercise and there is
nothing like 100% return aspect always 15
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Finance

This cognitive heuristic puts

REPRESENTATIVE weight on previous experiences

BIAS and beliefs which gives the
thought to investors for being in
a stereotype framework.
 Behavioral
Finance

“Too many people overvalue what

they are not and undervalue what
they are.” - Malcolm S. Forbes
OVERCONFIDENCE
BIAS
18
 Behavioral
Finance

“Too many people overvalue what

they are not and undervalue what
they are.” - Malcolm S. Forbes

Gambler’s fallacy
 Behavioral
Finance
Gambler’s fallacy
Gambler’s fallacy
“Too many people
overvalue what they are
not and undervalue what
they are.”
- Malcolm S. Forbes