Werner De Bondt

Last updated
Werner De Bondt
Born1954 (age 69–70)
Belgium
Academic career
Institution DePaul University 2002–
University of Wisconsin–Madison 1984-2002
Field Behavioral finance, behavioral economics, investment management, investor psychology, entrepreneurial beliefs and motivation, financial planning and investor advice
Alma mater Cornell University Ph.D. 1985
Influences David Dreman, Jacques Ellul, Benjamin Graham, Karel (Galileo) Imbrechts, Daniel Kahneman, Wim Moesen, Paul Slovic, Richard Thaler, Amos Tversky, Lambert Vanthienen.

Werner F.M. De Bondt is one of the founders in the field of behavioral finance. He is also the founding director of Richard H. Driehaus Center for Behavioral Finance at DePaul University in Chicago. Previously, he was the Frank Graner Professor of Investment Management at the University of Wisconsin-Madison, and the Thomas F. Gleed Chair of Business Administration at Albers School of Business and Economics at the Seattle University.

Contents

Life and career

He is a native of Belgium and an alumnus of Hagelstein (St.-Katelijne-Waver). He received a degree as Handelsingenieur from Universitaire Faculteiten Sint-Ignatius Antwerpen (Antwerp, Belgium). He subsequently earned an M.B.A. from the Catholic University of Louvain (Louvain, Belgium), a master's degree in Public Administration from Cornell University (Ithaca, New York) and a Ph.D. in Business Administration from Cornell University.

Alongside Daniel Kahneman, Amos Tversky, Hersh Shefrin, Meir Statman, Robert Shiller and Richard Thaler (with whom he co-wrote the seminal paper “Does the Stock Market Overreact? ” in 1985) [1] [2] De Bondt helped define the field of behavioral (or psychological) finance long before it became popular. He has investigated key research questions such as the intuitive tendency of naïve investors to extrapolate past trends in stock prices and corporate earnings, market overreaction, bubbles, the excessive self-confidence of traders, and their herding instinct. His work has been published in numerous academic journals (including the Journal of Finance, the Financial Analysts Journal, the European Economic Review, and the American Economic Review) and De Bondt has been cited in many European and U.S. news publications, including the Chicago Tribune, [3] [4] [5] Finanz und Wirtschaft, [6] [7] the Frankfurter Allgemeine Zeitung, [8] [9] [10] the Neue Zürcher Zeitung, [11] [12] the Milwaukee Journal Sentinel, [13] [14] De Standaard, [15] Trends, [16] [17] BNQ Perspectives on banking, [18] Elliott Wave International, [19] LESSAC, [20] De Tijd, [21] [22] [23] the Wall Street Journal and others. [24] [25] [26] [27] [28] [29] [30] [31] [32]

Professor De Bondt has been a guest on various TV programs including PBS [33] and Kanaal Z with Veronique Goossens. [34] He speaks at many conferences organized by universities and government agencies. [35] He has served on the editorial boards of several academic journals, including the Journal of Behavioral Finance, the Financial Analysts Journal, the British Accounting Review, the Journal of Empirical Finance, and Behavioral Science & Policy.

Published Books/Monographs

Selected published articles

Related Research Articles

<span class="mw-page-title-main">Stock market</span> Place where stocks are traded

A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks, which represent ownership claims on businesses; these may include securities listed on a public stock exchange as well as stock that is only traded privately, such as shares of private companies that are sold to investors through equity crowdfunding platforms. Investments are usually made with an investment strategy in mind.

A stock market bubble is a type of economic bubble taking place in stock markets when market participants drive stock prices above their value in relation to some system of stock valuation.

A market trend is a perceived tendency of the financial markets to move in a particular direction over time. Analysts classify these trends as secular for long time-frames, primary for medium time-frames, and secondary for short time-frames. Traders attempt to identify market trends using technical analysis, a framework which characterizes market trends as predictable price tendencies within the market when price reaches support and resistance levels, varying over time.

<span class="mw-page-title-main">Speculation</span> Engaging in risky financial transactions

In finance, speculation is the purchase of an asset with the hope that it will become more valuable shortly. It can also refer to short sales in which the speculator hopes for a decline in value.

In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. As a type of active management, it stands in contradiction to much of modern portfolio theory. The efficacy of technical analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable, and research on whether technical analysis offers any benefit has produced mixed results. It is distinguished from fundamental analysis, which considers a company's financial statements, health, and the overall state of the market and economy.

An economic bubble is a period when current asset prices greatly exceed their intrinsic valuation, being the valuation that the underlying long-term fundamentals justify. Bubbles can be caused by overly optimistic projections about the scale and sustainability of growth, and/or by the belief that intrinsic valuation is no longer relevant when making an investment. They have appeared in most asset classes, including equities, commodities, real estate, and even esoteric assets. Bubbles usually form as a result of either excess liquidity in markets, and/or changed investor psychology. Large multi-asset bubbles, are attributed to central banking liquidity.

<span class="mw-page-title-main">Efficient-market hypothesis</span> Economic theory that asset prices fully reflect all available information

The efficient-market hypothesis (EMH) is a hypothesis in financial economics that states that asset prices reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information.

Behavioral economics is the study of the psychological, cognitive, emotional, cultural and social factors involved in the decisions of individuals or institutions, and how these decisions deviate from those implied by classical economic theory.

<span class="mw-page-title-main">Richard Thaler</span> American economist

Richard H. Thaler is an American economist and the Charles R. Walgreen Distinguished Service Professor of Behavioral Science and Economics at the University of Chicago Booth School of Business. In 2015, Thaler was president of the American Economic Association.

Market timing is the strategy of making buying or selling decisions of financial assets by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis. This is an investment strategy based on the outlook for an aggregate market rather than for a particular financial asset.

<span class="mw-page-title-main">Market sentiment</span> General attitude of investors to market price development

Market sentiment, also known as investor attention, is the general prevailing attitude of investors as to anticipated price development in a market. This attitude is the accumulation of a variety of fundamental and technical factors, including price history, economic reports, seasonal factors, and national and world events. If investors expect upward price movement in the stock market, the sentiment is said to be bullish. On the contrary, if the market sentiment is bearish, most investors expect downward price movement. Market participants who maintain a static sentiment, regardless of market conditions, are described as permabulls and permabears respectively. Market sentiment is usually considered as a contrarian indicator: what most people expect is a good thing to bet against. Market sentiment is used because it is believed to be a good predictor of market moves, especially when it is more extreme. Very bearish sentiment is usually followed by the market going up more than normal, and vice versa. A bull market refers to a sustained period of either realized or expected price rises, whereas a bear market is used to describe when an index or stock has fallen 20% or more from a recent high for a sustained length of time.

A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these panics. Other situations that are often called financial crises include stock market crashes and the bursting of other financial bubbles, currency crises, and sovereign defaults. Financial crises directly result in a loss of paper wealth but do not necessarily result in significant changes in the real economy.

Momentum investing is a system of buying stocks or other securities that have had high returns over the past three to twelve months, and selling those that have had poor returns over the same period.

David Dreman is an investor, who founded and is chairman of Dreman Value Management, an investment company.

The following outline is provided as an overview of and topical guide to finance:

<span class="mw-page-title-main">Robert J. Shiller</span> American economist (born 1946)

Robert James Shiller is an American economist, academic, and author. As of 2022, he served as a Sterling Professor of Economics at Yale University and is a fellow at the Yale School of Management's International Center for Finance. Shiller has been a research associate of the National Bureau of Economic Research (NBER) since 1980, was vice president of the American Economic Association in 2005, its president-elect for 2016, and president of the Eastern Economic Association for 2006–2007. He is also the co‑founder and chief economist of the investment management firm MacroMarkets LLC.

In finance, momentum is the empirically observed tendency for rising asset prices or securities return to rise further, and falling prices to keep falling. For instance, it was shown that stocks with strong past performance continue to outperform stocks with poor past performance in the next period with an average excess return of about 1% per month. Momentum signals have been used by financial analysts in their buy and sell recommendations.

<span class="mw-page-title-main">Do-it-yourself investing</span>

Do-it-yourself (DIY) investing, self-directed investing or self-managed investing is an investment approach where the investor chooses to build and manage their own investment portfolio instead of hiring an agent, such as a stockbroker, investment adviser, private banker, or financial planner.

Jeremy James Siegel is the Russell E. Palmer Professor of Finance at the Wharton School of the University of Pennsylvania in Philadelphia, Pennsylvania. Siegel comments extensively on the economy and financial markets. He appears regularly on networks including CNN, CNBC and NPR, and writes regular columns for Kiplinger's Personal Finance and Yahoo! Finance. Siegel's paradox is named after him.

Guido Baltussen is a Dutch economist who is professor in Behavioral Finance at Erasmus University Rotterdam and Head of Factor Investing and co-head of Quant Fixed Income at Robeco Asset Management.

References

  1. ↑ Werner De Bondt, and Richard Thaler, “Does the stock market overreact?,” The Journal of Finance 40, no. 3 (1985): 793-805.According to Google Scholar, this paper has been cited 10642 times.
  2. ↑ Werner De Bondt, and Richard Thaler, “Do security analysts overreact?,” The American Economic Review (1990): 52-57. According to Google Scholar, this paper has been cited 1211 times. Google Scholar
  3. ↑ Bill Barnhart, “Fresh, clean bubble theories,” Chicago Tribune, June 30, 2002. http://articles.chicagotribune.com/2002-06-30/business/0206300085_1_bubble-tech-stocks-stock-market
  4. ↑ Andrew Leckey, “Pop goes the bubble,” Chicago Tribune, April 17, 2005. http://www.chicagotribune.com/sns-yourmoney-0417bubble,0,6475353.story
  5. ↑ John Lux, “Pop goes a market? There is only one sure way to avoid investment bubbles: Show your heels,” Chicago Tribune, April 17, 2005.
  6. ↑ "«Als hätte Gott sie speziell gesegnet»". Finanz und Wirtschaft (in German). 2005-02-19. Retrieved 2024-03-15.
  7. ↑ Philippe Béguelin and Peter Kuster, “Regulierung ist zur Koodination wichtig,” Finanz und Wirtschaft, December 13, 2008.
  8. ↑ Hanno Beck, “Spekulative Blasen wird es immer geben,” Frankfurter Allgemeine Zeitung, April 12, 2008.
  9. ↑ "Anlagestrategie: „Der Markt braucht Zeit"". FAZ.NET (in German). 2006-10-30. ISSN   0174-4909 . Retrieved 2023-08-17.
  10. ↑ "Im Gespräch: Werner de Bondt: „Spekulative Blasen wird es immer geben"". FAZ.NET (in German). 2008-12-04. ISSN   0174-4909 . Retrieved 2023-08-17.
  11. ↑ Gerhard Schwarz, “Menschen und Geld --- das liebe ich,” Neue Zürcher Zeitung, July 2, 2005.
  12. ↑ Volker Hergert, “Dem Trend auf der Spur,” Neue Zürcher Zeitung, June 25, 2008.
  13. ↑ Kathleen Gallagher, “Buy-and-hold is viable strategy, some say,” Milwaukee Journal Sentinel, March 20, 2004.
  14. ↑ John Schmid, “October has history of spooking investors. Crashes, swings of 2008 mimicked fall of 1929, 1987,” Milwaukee Journal Sentinel, November 1, 2008.
  15. ↑ "De belegger als gevoelsmens". De Standaard (in Flemish). 2007-06-20. Retrieved 2023-08-17.
  16. ↑ "Im Gespräch: Werner de Bondt: „Spekulative Blasen wird es immer geben"". FAZ.NET (in German). 2008-12-04. ISSN   0174-4909 . Retrieved 2023-08-17.
  17. ↑ Ilse De Witte, “We zitten in de grootste zeepbel ooit,” Trends, March 18, 2015. http://trends.knack.be/economie/finance/werner-de-bondt-we-zitten-in-de-grootste-zeepbel-ooit/article-normal-542415.html
  18. ↑ BNQ Perspectives on banking, December 17, 2013. http://bnq.lecho.be/epargner_et_investir/la-psyche-de-linvestisseur/
  19. ↑ Susan C. Walker, “De Bondt on investor sentiment,” Elliott Wave International, March 18, 2014 http://www2.elliottwave.com/freeupdates/archives/2014/03/18/QA-DeBondt-on-Investor-Sentiment.aspx#axzz48MDLrJOh
  20. ↑ “Manifestations,” LESSAC, May 15, 2008.http://lessac.escdijon.eu/index.php?page=manifestations
  21. ↑ Wouter Van Driessche, “Casino's zijn veiliger dan beurzen,” De Tijd, October 4, 2008.
  22. ↑ Kris Van Hamme, “We beleven een crisis in autoriteit,” De Tijd, July 24, 2016. http://www.tijd.be/markten_live/nieuws_algemeen/We_beleven_een_crisis_in_autoriteit.9791070-3452.art?ckc=1
  23. ↑ Kris Van Hamme, “Economische modellen zijn toch grappig?,” De Tijd, December 9, 2017. https://www.tijd.be/markten-live/nieuws-algemeen/Thaler-en-De-Bondt-Economische-modellen-zijn-toch-grappig/9961518
  24. ↑ Susan Trammel, “Are analysts just human, after all?,” CFA Magazine, September–October 2003.
  25. ↑ Erik Durnez, “Beleg filisofisch, planmatig en emotievrij,” Uw Vermogen, January 2005.
  26. ↑ Sven Vande Broek, “Stuur uw beleggingsgedrag,” Cash, June 15, 2006.
  27. ↑ Emmanuel Garessus, “La finance comportementale révèle combien les bourses sont prévisibles,” AGEFI, November 13, 2006. https://www.mataf.net/fr/forum/topic/2069-la-finance-comportementale-revele-combien-les-bourses-sont-previsibles/
  28. ↑ Jo Napolitano, “Shopping for stocks: Perspectives on P/Es,” Better Investing, February 2007.
  29. ↑ "Fachpublikation «Schweizer Bank» eingestellt". Handelszeitung (in Swiss High German). Retrieved 2023-08-17.
  30. ↑ Wouter Van Driessche, “Casino's zijn veiliger dan beurzen,” De Tijd, October 4, 2008.
  31. ↑ Oliver Schaerrer, “Les bulles spéculatives s’articulent en quatre temps,” Le Magazine de la Banque Cantonale de Genève, Autumn 2008. https://www.bcge.ch/pdf/dialogue-automne-2008.pdf
  32. ↑ Piet Depuydt, “Echte leider is morele leider, ook in een bedrijf,” NRC Handelsblad, January 2, 2009.
  33. ↑ NBR interview "Your Mind and Your Money" PBS2, January 16, 2014. https://www.youtube.com/watch?v=Aj1MyBQR7ck
  34. ↑ “Ik zie heel weinig nieuwe ideeën om de financiële wereld veiliger te maken, ” June 6, 2017. http://kanaalz.knack.be/talk/ik-zie-heel-weinig-nieuwe-ideeen-om-de-financiele-wereld-veiliger-te-maken/video-normal-871391.html
  35. ↑ CVM (Securities Regulatory Agency of Brazil),"The psychology of regulation," Rio de Janeiro, Brazil, December 2016.https://www.youtube.com/watch?v=K9LMgHCRZtM
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