Behavioral finance is the study of the role played by psychological factors in financial decision-making and their effect on overall market outcomes. It examines how individual and group behavior deviates from the rational pursuit of self-interest posited by classical economic theory.
Contrarian investing is a strategy that involves going against prevailing market trends by buying assets that are performing poorly and selling those that are performing well. Contrarian investors believe that markets often overreact to news and developments, leading to opportunities for buying low and selling high.
The Greater Fool Theory posits that even if a stock or the entire market is overvalued, investing in such assets can still be justified by the belief that there are always other 'fools' who will pay a higher price.
A theoretical approach to investment choices based on the assumption that for any given expected return, rational investors will seek to minimize their risk, and for any given level of risk, they will seek to maximize their return.
