Behavioural Finance

Sanlam Global Investment Solutions (SGIS) is the international distribution business unit of Sanlam Investments.

Markets do go up and down. However, crashes and bubbles shouldn’t happen if people made rational decisions and markets were efficient.

These events cannot be explained by modern economics alone, something else must be at work for events to occur. This is why a new theory was needed and thus the concept of investor psychology and Behavioural Finance was born.

There are many ways to describe what Behavioural Finance is all about, the cross-breed of psychology and economics, marrying the field of investments with biology and psychology or simply putting a human face on investing. No matter what label we attach to it, Behavioural Finance is the bridge between the “ideal” world of modern economics and finance or “neoclassical economics” and the real world, where we find ourselves working and investing in today.

“Modern economic theory is very powerful, making specific predictions from a small number of technical assumptions but it can be mystified and come undone by the ordinary behaviour of ordinary people!”