Beyond Greed and Fear
Understanding Behavioral Finance and the Psychology of Investing
Shefrin, Hersh Holds the Mario L. Belotti Chair in Finance, Leavey School of Business, Santa Clara University
Print publication date: 2002 (this edition)
Published to Oxford Scholarship Online: November 2003
Print ISBN-13: 978-0-19-516121-2




Chapter 12 Open-Ended Mutual Funds: Misframing, “Hot Hands,” and Obfuscation Games
doi:10.1093/0195161211.003.0012

Hersh Shefrin
Abstract: Misframing and heuristic-driven bias combine to confuse investors about the relative contributions of skill and luck in fund performance. Investors invariably attribute excessive weight to skill, and consequently they tend to overweight the importance of an individual fund's track record. Moreover, open-end mutual funds companies tend to play to investors' weaknesses by inducing opaque frames.

Keywords: framing, heuristic-driven bias, Peter Lynch, obfuscation games, representativeness,

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Contents
 
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Full Book Contents
Preface
Part I What Is Behavioral Finance
Chapter 1 Introduction
Chapter 2 Heuristic-Driven Bias: The First Theme
Chapter 3 Frame Dependence: The Second Theme
Chapter 4 Inefficient Markets: The Third Theme
Part II Prediction
Chapter 5 Trying to Predict the Market
Chapter 6 Sentimental Journey: The Illusion of Validity
Chapter 7 Picking Stocks to Beat the Market
Chapter 8 Biased Reactions to Earnings Announcements
Part III Individual Investors
Chapter 9 “Get-Evenitis”: Riding Losers Too Long
Chapter 10 Portfolios, Pyramids, Emotions, and Biases
Chapter 11 Retirement Saving: Myopia and Self-Control
Part IV Institutional Investors
Chapter 12 Open-Ended Mutual Funds: Misframing, “Hot Hands,” and Obfuscation Games
Chapter 13 Closed-End Funds: What Drives Discounts?
Chapter 14 Fixed Income Securities: The Full Measure of Behavioral Phenomena
Chapter 15 The Money Management Industry: Framing Effects, Style “Diversification,” and Regret
Part V The Interface Between Corporate Finance and Investment
Chapter 16 Corporate Takeovers and the Winner's Curse
Chapter 17 IPOs: Initial Underpricing, Long-Term Underperformance, and “Hot-Issue” Markets
Chapter 18 Optimism in Analysts' Earnings Predictions and Stock Recommendations
Part VI Options, Futures, and Foreign Exchange
Chapter 19 Options: How They're Used, How They're Priced, and How They Reflect Sentiment
Chapter 20 Commodity Futures: Orange Juice and Sentiment
Chapter 21 Excessive Speculation in Foreign Exchange Markets
Final Remarks
Bibliography
Index
 
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