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How Behavioral Biases Influence Financial Decisions

About the class

This session will provide names, definitions, and many examples of how behavioral biases negatively impact financial decisions. Understanding these biases is the first step to overcoming them and improving performance, and for capitalizing on inefficiencies in the financial markets. 

Biases explored include representativeness, availability, overconfidence, anchoring, and loss aversion. We will specifically show how biases influence expectations and forecasts, investment strategies, market prices, earnings revisions and surprises, etc. A comprehensive example of how biases impact an individual’s reluctance to sell losers will be explored, as well as suggestions to improve the decision-making process. 

• Biases explored include but are not limited to 
– Representativeness 
– Availability 
– Overconfidence 
– Anchoring 
– Loss aversion 
• Ways to overcome biases 
• Comprehensive examples including reluctance to sell losers 

About the Presenter

Dr. Kevin Spellman describes himself as a pracademic – he has professional and academic experiences. He is a Senior Lecturer and Director of the Investment Game at IE Business School and a Senior Lecturer and the Director of the Investment Management Certificate Program at the University of Wisconsin-Milwaukee. Students refer to him as “Coach,” as he coaches investment analysts.

Since 2000, Spellman’s academic pursuits have been in investments, including security analysis through portfolio management. His research focuses on issues related to behavioral finance, investment strategy, and asset pricing. He has taught various courses in financial management, investments, behavioral finance, CFA review, value investing, and forensic accounting, and he has directed / led student investment programs at IE Business School, University of Wisconsin-Milwaukee, University of Wisconsin-Madison, and The Ohio State University.

Spellman has been a professional money manager since 1994. He has been an analyst, portfolio manager of multi-billion dollar funds, and director of research. He has worked at various firms on the buy-side (State Teachers Retirement System of Ohio, CUNA Mutual) and sell-side (ISI Group) of Wall Street. His experience crosses most asset classes (private business valuation, international equity, US equity, real estate, etc.). He consults for various firms in the areas of investment strategy, quantitative analysis, behavioral finance, and cost of capital.
 
Spellman has a PhD in behavioral finance from Durham University (UK), a MS in Finance from University of Wisconsin-Madison, and a BS in finance from the University of Wisconsin-La Crosse. He is a member of the CFA Institute, and has been a member of various CFA societies and a board member of the CFA Society of Madison. Spellman is a CFA charterholder.

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