The New Finance

In this Third Edition, Robert Haugen focuses on the evidence, causes, and history of overreactive pricing in the stock market. He argues that, unlike the other social sciences, economic models aggregate from the assumed behaviors of individuals to predictions about market pricing. These models fail to capture the complexity of human interaction. In addition, Haugen argues that each interaction is entirely unique. The complexity and the uniqueness of interactions make it impossible to generalize from the preferences of individuals to meaningful conclusions about the structure and behavior of market prices. The logical conclusion: Both rational and behavioral economics should be reconsidered. Bob Haugen is Professor Emeritus at the University of California, Irvine. He serves as Managing Partner to Haugen Custom Financial Systems, which licenses portfolio management software to pension funds, endowments, and institutional and high-net-worth money managers. For further study on the author's unique approach to stock market analysis, read the entire Bob Hougen series, The Inefficient Stock Market, What Pays Off and Why, and Beast on Wall Street. Visit www.prenhall.com/haugen for additional resources. Or go to www.newfinance.com.

 1. Search for the Grail.


 2. The Old Finance.


 3. How Long is the Short Run?


 4. The Ancient Finance.


 5. The Past and the Future.


 6. The Race Between Value and Growth.


 7. Surprise or Risk Premium?


 8. “Bearing” Risk in the Stock Market.


 9. The Holy Grail.


10. Rational Finance, Behavioral Finance, and the New Finance.


11. Dawn of the New Finance.


12. Final Words.


Glossary.