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The study of behavioral finance combines the investigation and expertise from research and practice into smart portfolios of individual investors’ portfolios. Understanding cognitive errors and misleading emotions drive investors to their long-term goals of financial prosperity and capital preservation. 10 years ago, Behavioral Finance was still considered an incipient, adolescent science. First Nobel Prize in Economics awarded to the study of Behavioral Economics in 2002 established the field as a new, respected study of economics. 2013 Nobel Prize was awarded to three economists, one of them considered the one of the founders of the Behavioral Finance. As such, by now we are entering the coming of age of behavioral finance. It is now recognized as a science of understanding investors behaviors and their biased patterns. It applies quantitative finance and provides practical models grounded on robust understanding of investors behavior toward financial risk. Financial Personality influences investment decisions. Behavioral portfolio construction methods combine classic finance with rigorously quantified psychological metrics and improves models for financial advice to enhance investors chances in reaching their lifetime financial goals. Behavioral finance helps understanding psychological profile dissimilarities of individuals and how these differences manifest in investment decision process. This new science has become now a must topic in modern finance.

Academic and practitioner’s literature has a plethora of evidence that active investment management is futile economically and underperforming financially, - more preponderant for large, blue chips. For smaller capitalization companies, purchased at discount there is an attractive, sustainable return promise, a long-term outperformance. We introduce a terminology that encapsulates this capitulation against this apparently overwhelming forces of tangible underperformance of active investment, inefficient asset allocation and high risk - low return portfolios, the era of Ecclesiastes Finance. Investors loathe to make decisions for fear of loss and discount all negative subtle announcement of the fragility of our gains and futility of our investment arrogance. And ignoring them can lead investors to make less fortunate financial decisions that can affect portfolio for decades. Investing with an Ecclesiastes attitude - the fragility of human condition in context of financial affairs - temporary gains and losses are less significant when framed in a larger perspective.

The study of behavioral finance combines the investigation and expertise from research and practice into smart portfolios of individual investors’ portfolios that can overcome cognitive errors and misleading emotions and drive investors to their long term goals of financial prosperity and capital preservation. If 10 years ago, Behavioral Finance was still considered and incipient science, the first Noble Prize in Economics awarded to the study of Behavioral Economics establish the field as a new, respected study of economics. 2013 Nobel Prize was awarded to three economists, one of them considered the one of the founders of the Behavioral Finance. As such, by now we are entering the coming of age of behavioral finance. It is now establish as a science of understanding investors behaviors and distill these patterns with quantitative finance to provide practical models grounded on robust understanding of investors as well as investments. The practical application of BiFi can help us discover how individual and group herd behaviors can lead to biased investment decisions, understand the resorts behind their decision making processes and develop practical tools to improve portfolio and risk management processes, so in the end to be better serve the client-owner of the funds managed an finally to help for the better good of society at large

In the pursuit of understanding the behavior of the market player, the basic argument relays on the supposition that the risk appetite increases exactly at the worst moment - when the capacity to assume additional risk decreases significantly. People view a sample randomly drawn from a population as highly representative and cvasi similar to the population in all its essential characteristics. They expect any two samples drawn from a particular population to be more similar to one another and to the population than is statistically justifiable. This behavior is different from the tenets of classic finance theory. The gap between from theory to the practice of Behavioral Finance (BiFi- nickname) has direct application to the investment management practice. Students of Behavioral Finance can develop skills to be employed in their practices for their clients. Behavioral Finance can teach about mental, emotional, psychological and social biases that lead to mistakes and biases o market efficiency, pricing anomalies and other market dynamics and risk – return investment outcomes.

The paper presents a critique of standard investment analysis, fundamental and technical, and develops an alternative more comprehensive approach that should include some of the tenets of behavioral finance. In the pursuit of understanding the behavior of the market player, the basic argument relies on the supposition that the risk appetite increases exactly at the worst moment - when the capacity to assume additional risk decreases significantly. People view a sample randomly drawn from a population as highly representative and quasi similar to the population in all its essential characteristics. They expect any two samples drawn from a particular population to be more similar to one another and to the population than is statistically justifiable. This behavior is different from the tenets of classic finance theory. The paper aims at demonstrating that investor psychological biases lead to investment performance to tilt to the mean in the long run and by following the trend, the financial market population does not enjoy significant sustainable benefits. As a reflection of the behavioral biases and influences, the statistical demonstration supports the conclusion that markets do not random walk.

ary In the pursuit of understanding the behavior of the market player, the basic argument relays on the supposition that the risk appetite increases exactly at the worst moment - when the capacity to assume additional risk decreases significantly. People view a sample randomly drawn from a population as highly representative and cvasi similar to the population in all its essential characteristics. They expect any two samples drawn from a particular population to be more similar to one another and to the population than is statistically justifiable. This behavior is different from the tenets of classic finance theory. The article reviews some psychological concepts relevant and used in the study, in an interdisciplinary effort of understanding the correlation or causality between psychology and finance. The statistical interrogation describes the sampling methodology, the frequency of data and the empirical methodology that lead to analysis of the results and concluding remarks. The study provides details on raw statistical test scores, regression results and analysis. In this study, I evaluate the association between investors’ behavior and her portfolio results. The paper aims at demonstrating whether investor psychological biases lead to investment performance to tilt to the mean in the long run.

Classical economics considers people to be rational, self-interested and selfcontrolled. Behavioral economics showed instead that we are not as logical and efficient as we might think: we do care about others, and we are not as disciplined as we would like to be. Our intuitive mind works by mean of mental shortcuts that lead to erroneous decisions, since our mind delivers the products of these mental shortcuts, and we accept to follow them, spending the significant mental resources remaining available for other, survival related tasks.

Study of the literature and the models used in other countries, with higher or lower degrees of development for their financial and banking systems, raise for Romania, in our opinion, several issues which deserve a closer research. One of those issues concerns the fundamentals of real estate prices and the influence of household income, demographic changes and credit access on the dynamics of the housing market. Another area of interest is centered on the manifestation of a wealth effect that is associated with owning a property; as such an effect is present in other countries, as reported in literature. The National Bank of Romania defines this phenomenon as “the effect of the wealth value on the decisions of the population and the companies, regarding their consumption and investment decisions”. This effect can be generated either by variations in the value of assets owned (stocks, financial assets, real estate, etc.), or by the level of debt (i.e. housing, consumption, investment loans, including payments due). Therefore, such an increase in the population’s net wealth or an improvement of companies’ balance sheets can manifest a positive effect on consumption and investment, thus benefiting the aggregated demand. In a future research we plan to study the influence of the real estate market on Romania’s economy, especially through lending, construction activity, household consumption and stock market investment, with the aim of measuring this effect. The three directions for research require in-depth analysis of the complex dynamics of the sectors connected to the housing market and the acquiring of pertinent and up-to-date statistical data which should reflect price changes and other parameters of this field of study. Given the limitations of our database, with a narrow access to data regarding the direct population consumption, we have chosen to use the values for lending in lei as a proxy, which indirectly mirrors the indicator we wish to include in the research. We believe that the final purpose of the consumption loan reflects, in a significant measure, the population’s inclination towards consumption. With this in mind, we will analyze the correlation between the evolution of consumption lending and the population income. From here we will ascertain the inclination towards housing investment.

Although the field of modern finance has progressed impressively, it is still hard to explain on a scientific basis why people behave nonrationally when dealing with money. The classic finance assumes people rationalize and optimize their financial decisions. Behavioral Finance adds the importance of what investors should do and complements the mantra of classic finance with what people actually do, in terms of economic decisions. The new field of Neuroeconomy investigates the subtle and profound interactions within the human brain when faced with uncertainties of an economic decision. The most basic psychological traits of human being (fear, anger, greed and altruism) stamp an indelible mark on our decisions about money. The intellect (understanding a situation), reason (long term consequences of the contemplated action) and emotion (the judge of the course of action) are all intercorrelated resorts behind human decision making.

Although the field of modern finance has progressed impressively, it is still hard to explain on a scientific basis why people behave nonrationally when dealing with money. The classic finance assumes people rationalize and optimize their financial decisions. Behavioral Finance adds the importance of what investors should do and complements the mantra of classic finance with what people actually do, in terms of economic decisions. The new field of Neuroeconomy investigates the subtle and profound interactions within the human brain when faced with uncertainties of an economic decision. The most basic psychological traits of human being (fear, anger, greed and altruism) stamp an indelible mark on our decisions about money. The intellect (understanding a situation), reason (long term consequences of the contemplated action) and emotion (the judge of the course of action) are all intercorrelated resorts behind human decision making.