Dreman's Behavioral Model

Dreman's Behavioral Model explains how investors' emotions and biases influence their investment decisions. It highlights tendencies like overconfidence, a fear of losses leading to overly cautious choices, or excessive optimism during market highs. These behaviors often cause investors to act irrationally, often buying high out of greed or selling low out of panic. The model emphasizes that these psychological factors can lead to market inefficiencies and volatility, deviating from rational financial analysis. Recognizing these behaviors can help investors make more disciplined, informed decisions rather than reacting impulsively to market swings.