Behavioural Finance and Investment Decisions Training Course

Participants can translate macroeconomic developments into explicit asset-class assumptions and scenarios.

• Business-cycle indicators, inflation releases, policy rates, and market expectations
• Transmission of monetary policy through discount rates and asset prices
• Fiscal deficits, sovereign issuance, currency pressures, and term premiums
• Scenario matrices connecting macro surprises to asset-class sensitivities
• Distinguishing consensus forecasts from priced expectations in market quotations
• Documenting macro assumptions within an investment thesis and risk case

Participants can assess financial statements and convert findings into valuation assumptions.

• Income statement, balance sheet, and cash-flow links in valuation
• Normalising earnings for non-recurring items, accounting choices, and seasonality
• Free cash flow to firm and equity calculations
• Ratio analysis covering profitability, liquidity, solvency, efficiency, and cash conversion
• Red flags in revenue recognition, working capital, and related-party transactions
• Translating financial statement findings into forecast assumptions and downside cases

Participants can value bonds and assess sensitivity to interest-rate and credit changes.

• Discount factors, compounding conventions, and present-value calculations
• Yield-to-maturity, spot curves, forward rates, and reinvestment assumptions
• Bond pricing from coupons, principal repayment, and required yields
• Duration, modified duration, convexity, and interest-rate sensitivity estimates
• Credit spreads, default probabilities, recovery rates, and liquidity premiums
• Constructing bond return scenarios for parallel and non-parallel yield shifts

Participants can develop equity valuations and document a supported investment thesis.

• Dividend discount models under stable-growth and multi-stage assumptions
• Enterprise-value multiples adjusted for capital structure and accounting differences
• Discounted cash flow valuation using WACC, terminal value, and sensitivities
• Comparable-company selection, peer normalisation, and valuation range construction
• Reconciling intrinsic value estimates with prevailing market prices
• Recording valuation evidence in a disciplined investment thesis

Participants can construct an initial policy portfolio from objectives, constraints and risk measures.

• Expected return, variance, covariance, and correlation in portfolio construction
• Modern Portfolio Theory, efficient frontiers, and diversification limits
• Capital Asset Pricing Model assumptions, beta estimation, and required returns
• Strategic asset allocation aligned with objectives, horizon, liquidity, and constraints
• Risk budgeting by asset class, factor, issuer, and drawdown contribution
• Building an initial policy portfolio from stated client constraints

Participants can measure portfolio risk and specify meaningful stress scenarios and limits.

• Value at Risk methods: parametric, historical simulation, and Monte Carlo
• Expected shortfall, tail risk, and limitations of normal distributions
• Stress testing portfolios against rates, credit, equity, currency, and liquidity shocks
• Scenario analysis separating market risk, model risk, and assumption risk
• Drawdown measures, downside deviation, Sortino ratio, and maximum-loss limits
• Writing risk limits, escalation triggers, and exception-management procedures

Participants can draft core investment policy provisions and decision-accountability arrangements.

• Investment Policy Statement sections: objectives, constraints, governance, and benchmarks
• Return objectives expressed as nominal, real, absolute, or relative targets
• Liquidity, tax, legal, time-horizon, and concentration constraint analysis
• Delegated authority, segregation of duties, and investment committee responsibilities
• Benchmark selection using investability, representativeness, and risk comparability criteria
• Drafting policy provisions that support defensible investment decisions

Participants can explain key behavioural finance theories and their implications for investment judgement.

• Bounded rationality, heuristics, and systematic departures from expected utility
• Prospect Theory: reference dependence, loss aversion, and diminishing sensitivity
• Framing effects caused by presentation, language, and reference-point selection
• Mental accounting and its effects on portfolio-level risk assessment
• Regret aversion, ambiguity aversion, and preference reversals under uncertainty
• Separating behavioural explanations from rational responses to constraints

Participants can identify cognitive biases and build personal controls for recurring judgement errors.

• Overconfidence, calibration errors, and excessive turnover in security selection
• Representativeness, availability, anchoring, and confirmation bias diagnostic questions
• Disposition effect, sunk-cost fallacy, and loss-realisation resistance
• Hindsight bias and outcome bias in investment performance reviews
• Attribution bias, self-serving explanations, and post-trade learning failures
• Creating a personal bias register with observable warning signals

Participants can assess how social pressures, sentiment and anomalies influence market prices.

• Herding, information cascades, and momentum feedback in financial markets
• Social proof, authority bias, and committee conformity pressures
• Noise trading, sentiment indicators, and limits to arbitrage
• Market anomalies: momentum, value, post-earnings drift, and calendar effects
• Adaptive Markets Hypothesis and changing effectiveness of trading signals
• Distinguishing behavioural anomalies from data mining and factor exposures

Participants can evaluate whether active investment approaches are justified after costs and constraints.

• Efficient Market Hypothesis forms and implications for active management
• Joint-hypothesis problem in tests of market efficiency and asset-pricing models
• Information acquisition costs, analyst coverage, and informational efficiency
• Active versus passive decisions using fees, skill, capacity, and tax
• Factor investing: size, value, momentum, quality, and low-volatility exposures
• Evaluating whether an apparent edge survives realistic trading costs

Participants can design decision processes that expose assumptions and require independent challenge.

• Investment decision journals capturing thesis, evidence, probabilities, and disconfirming signals
• Base-rate analysis before adopting company-specific forecasts and narratives
• Pre-mortem reviews identifying failure modes before capital commitment
• Devil's-advocate roles, red teams, and independent challenge procedures
• Checklists separating signal quality, valuation, catalyst, and execution considerations
• Establishing decision gates for research, approval, monitoring, and exit

Participants can assess technical signals and test investment rules for common analytical biases.

• Price charts, support, resistance, trend measures, and volume confirmation
• Moving averages, relative strength, and momentum signal construction
• Fundamental and technical evidence combined without double-counting information
• Backtesting rules with survivorship, look-ahead, and selection-bias controls
• Out-of-sample testing, walk-forward analysis, and parameter sensitivity checks
• Position sizing rules based on conviction, volatility, and liquidity

Participants can assess derivatives-based hedges against stated exposures, costs and policy limits.

• Forward, futures, option, and swap payoffs for portfolio management
• Put-call parity, option Greeks, and volatility assumptions
• Hedging interest-rate, currency, equity, and commodity exposures with derivatives
• Basis risk, counterparty risk, margining, and collateral management
• Protective puts, covered calls, and collars under defined risk limits
• Comparing hedge costs against residual risk and policy constraints

Participants can select execution approaches and rebalancing rules appropriate to portfolio constraints.

• Trade implementation choices: market, limit, stop, and algorithmic orders
• Transaction-cost analysis using spreads, market impact, delays, and commissions
• Liquidity assessment through turnover, depth, free float, and redemption terms
• Market timing claims tested against opportunity cost and execution certainty
• Rebalancing bands, cash-flow rebalancing, and tax-aware trade prioritisation
• Recording execution rationale, approvals, and best-execution evidence

Participants can measure performance and review outcomes without outcome-driven judgement errors.

• Time-weighted and money-weighted returns for manager and investor evaluation
• Brinson attribution separating allocation, selection, and interaction effects
• Factor attribution, tracking error, information ratio, and active share
• Benchmark-relative analysis with style drift and unintended factor exposures
• Performance review questions that avoid outcome bias and hindsight bias
• Updating decision journals using evidence from realised and unrealised positions

Participants can identify conduct risks and apply governance controls to investment activity.

• Conflicts of interest, inducements, personal dealing, and disclosure controls
• Material non-public information, insider dealing, and information-barrier procedures
• Suitability, fiduciary duty, and client-mandate compliance in recommendations
• Model governance covering data lineage, assumptions, validation, and approvals
• ESG claims, stewardship evidence, and greenwashing risk in security selection
• Escalating policy breaches, valuation concerns, and conduct-risk incidents

Participants can assemble an investment recommendation with defined assumptions, controls and monitoring requirements.

• Consolidating macro outlook, valuation, behavioural risks, and portfolio objectives
• Selecting investable instruments consistent with mandate, liquidity, and risk limits
• Building base, upside, and downside cases with probability weights
• Defining entry criteria, position size, monitoring indicators, and exit rules
• Preparing investment committee papers with assumptions, evidence, and challenge points
• Peer review of decision quality, controls, and communication clarity

Participants can build, review and present a complete investment decision dossier for a defined mandate.

• Complete an investment decision dossier for a defined mandate
• State objectives, constraints, benchmark, governance, and risk budget
• Analyse market conditions, issuer fundamentals, valuation, and behavioural threats
• Recommend allocation, instruments, position sizes, hedges, and execution approach
• Defend scenarios, expected returns, downside limits, and monitoring triggers
• Present the recommendation, respond to challenge, and record revisions