Main Article Content
Abstract
Behavioral theories are viewed as a relatively new phenomenon in the security markets. Therefore, examining the subject is essential in order to understand the changing world of investments. Current technology enhances fast trade between individual investors. The concept of investing is seen as trendy. Therefore, people tend to make illogical decisions not based on true knowledge or information of a certain investment object. These decisions are explained via several behavioral finance theories. The outcome of poor knowledge is that investors allow these theories to effect on their decision-making process, thus resulting in major losses. The behavioral models can affect on individuals’ decision-making whether actual investments are conducted via professionals or not. The concept of investing is extensive as it can include all the aspects of purchasing items expected to gain more value in the future (art, antique, securities etc.). Therefore, it has been decided to narrow down the subject to concentrate on stock trading and the impact of behavioral finance on individual portfolio investors.