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Show Salt e4 Set Reasonable Goals, AvoidInvestment Gaffes Lak bune BUSI NESS Sunday Holiday sales hopes pinned on ZipZaps BY DAVID KOENIG months away from re tirement told me, “My wife and | should have diversified few the growing with the market rocket we gambled. and lost So yes, intellectually w thy may know that som meats are too risky body of work id of behavioral fi nance, Nofsinger addresses rors Suchas v and not ties that have gone up in val suitable for us. We may know that the right way b st is to choose and stick an asset allocation plan that ue, while hanging onto los ers too long(by not selling investors refuse to admit fits our goals and risk toler ance, and to diversify broadly they made a mistake when they bought). Othermistakes: Relying But we do somethingelse entirely “I believe it is emotion that induces action,” said John R. Nofsinger, assistant professor offinanceat Washington State University in Pullman. “The investment industry strongly appeals to our emotions and too much on the adviseof experts,” including ana: lysts and investment news: letters; chasingafter recent hot performers and not pay ing enoughattention or sometimes not even being aware of psychological biasesin order to move us to act. This usually is not in thebest interest of the investor. Nofsinger, a leading author. ity on investor psychology discusses these biases and how to protect ourselves against theminhis new book, Invest ment Blundersof the Rich and investment costs, such as mutual fund fees. Why all these mistakes? Nofsinger concludes and my anecdotal evidence am ply demonstrates it that most investors do not have well-defined financial goals and do not understand the relationshipbetweenthe Famous and What You CanLearn From Them(Finan cial Times Prentice Hall, 302 pages, $24) Nofsingerdissects some of thebiggest financial fiascos of late any sound reason, much lapse in 1998of Long-Term Capital Management, a hedge fund runby Ph.D.s and Nobel Prize laureates. lated to Nofsinger’s book but that backs up its point These investors “have events relate to them. Barings Bank, for example, was brought downbytheillegal acts of roguetrader Nicholas n kids. the executives “The Associated Press for strong holiday toy sales on the little cars, which they dubbedZipZaps. strategic business. “We really cane ae sas ° We thinkit’s going to love it because it speaks toa But Nofsinger finds a com mon thread betweenthese and othercolossal failures and the day to-day errors of manyindi: vidualinvestors: greed, overconfidence, the use of leverage (which magnifies losses as well as gains), and the taking of excessive and ever-higher levels of risk. “Part of the problemis that when aninvestor takes a risk and is rewarded, that investor takestherisk again,” Nofs- N.Y. in a commentnot re bought [or sold] becausea co-worker recommendedthe investment, or because an in basicstarter kits that are DON CARROLL tiny rae s of the Ford Mus: tang, Chrysler PT Cruiser and other cars. They must be as sembled with a tiny screwdriv. er. Unlike conventional remote-control cars, they re charge quickly, in 45 seconds. The big appeal, RadioShack RadioShack executive elodeon show he Wild Thornberry:'s” and “SpongeBob motive Museumin Los Angeles, for 200 kids. The cars, made in Asia, sell makeover kits, Theaccessoriessell for $5 to $13. The cars and controllers come in only two radio frequencies, so hobbyists would need to ownatleast one car of hopes, will be upgradedengines broadenthe cars’ appeal among girls. Fort “Wetook themte four focus third-quarter earnings by 30 percent. Sotheretailer is backingits bet on the ZipZaps with several million dollars in advertising, Carroll said. “We thinkit’s going to drive people to the stores,” Carroll said. “Given the state of the economy, people are goingto be lookingfor stocking stuffers.” FDIC INSURED C.D.'s 12 Month CD gether themselve: roll, a seniorvicepi their cars for different speeds and handling precision. Ra- more women. Onesucheffort, a groups and kids loved them. They wanted to put themto- give owners theability to tune Worth-based dioShack has struggled to at: tract younger shoppers and each frequency to race against all comers. the top model is billed at 23,500 revolutions per minute tires, and gear ratios, which based on Nick- articlein afinancial publi cation praisedit or because $10,000minimum. FDIC insured. Subject to availability PTes aT DTATH URL Askaboutour easy transfer and rollover programs with HIGHER YIELDS for IRA, 401k and 403B's FIRST Federal =f)giat] (S01) 268-6274 SSIS South 900 Eayt, Suite LOO SL risk. Few indeedev encetheir own obje their ownpurposesfor a particularinvestment,” As Nofsinger’s book ly demonstrates, thatis arecipe for disaster EXECUTIVE Featured guest speaker: Banker said. Mike Shustek Vestin Chairman ofthe Board, published author andguest lecturer. Humberto Cruz can be reached atAskHumberto aol.com or c/o Tribune N. Michi 500, Chica go, IL 60611 ATTEND THE FOLLOWING SEMINAR. 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SIGNED -FO inside stores, failed. 7; drive peop:le to the stores.” they weren't afraid to ak Leeson, who was sent to jail Piao ia joint venture to open kiosks younger demographic.” The electronics retailer plans to unveil the toys Wed nesday at the Petersen Auto- that few people can articu Britain's 23-year-old Barings Bank in 1995; and thenear col Atfirst flush, small inves tors may notthink those t, hope, will| be holiday retailing history, at $19.99 a pop. Ra. lioShack is pinning its hopes nancial well being lamconstantly amazed County, Calif.; that of Great 1994 bankruptcy of Orange a choices they make fortheir portfolios and theirfuture fi less an overall, coherent egy for the investment decis ions they've made,” said Dana Banker, afinan: cial adviserin Rochester, recent years, including the broueht samples of the cars i held focus groups Be a part of the mosteagerly anticipated home show of the year! Reserve your spacein the 6-7:15 p.m. Rm. 131 10 a.m. Rm. 101 Deseret News Fall Home Improvement, Remodeling and Decorating Show special section. Publishing 6-7:15 p.m. Rm. 101 Thursday, Oct. 10 in the Deseret News and Friday, Oct. 11 in The Salt Lake Tribune,it’s the perfect opportunity to talk directly to those who are looking for help with their home improvements. 10 a.m. Rm. 101 ALL SESSIONS WILL BE AT THE WSU-Davis Campus 915 W. 1000 No., Layton, Utah WEBERSTATEUNIVERSITY DEADLINE: Friday, Oct. 4 for space reservation Changing Minds and one-proofservice. JOHN B. GODDARD BUSINESS&ECONOMICS MUU en call 626-7545 or click on goddard.w Tm Tel Pan easy} Yewspaper Agency Corporation Che SaltdLakeCribune Pro roehanny |
