Behavioral finance FAQ / Glossary (N-O)

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Full list

Na

Dates of related message(s) in the Behavioral-Finance group (*):

Year/month, d: developed / discussed, i: incidental

Narcissism, narcissist

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Narrative, narration

See numeracy bias

Narrow thinking

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Ne

Dates of related message(s) in the Behavioral-Finance group (*):

Year/month, d: developed / discussed, i: incidental

(human) Need

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Neighborhood effect

01/1i + see home bias, familiarity, availability heuristic

Neural / neuronal nets

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Neuro-linguistic, Neuro-semantics

Neuroeconomics, Neurofinance

Neuropsychology

Neuroscience

Due to their lengths, those articles are in a separate page

of this "N-O" section of the Glossary

 

Neutral market, Neutral trend

See trend, volatility

Asleep? Or just waiting?

Definition:

A neutral market / neutral trend refers to a market period, a bit asleep,

in which there is no clear price trend, neither an uptrend nor a downtrend.

Wow, a long truce, white flags on all sides of the battleground,

while troops move only laterally. Who will shoot first?

How investors might react?

Here are some hints:

Most traders (option traders, swing traders) would play only on volatility

(or on possible changes in volatility, as volatility tends to be low in neutral markets).

Some value investors and contrarians might start

* to buy (see "accumulation") if prices are low (after a prolonged crash for example),

* or to sell if prices are puffed up (end of a bubble).

(effect of / reaction to) News

03/04i + see information

No

Dates of related message(s) in the Behavioral-Finance group (*):

Year/month, d: developed/ discussed, i: incidental

Noise trader / Noise trading

 

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Non-independence

(in decision distributions) see independence

Non-linearity, nonlinear effect / system

Non-stationary

Due to their lengths, those articles are in a separate page

of this "N-O" section of the Glossary

Norms (social)

01/1i + see groupthink, social learning

Nostalgia stocks

See image types + anchoring, underreaction

Ex-movie stars.

Nostalgia stocks are stocks of companies that:

Had their moment of glory or fashion,

Lost most of their attractiveness since then,

But are still rather overpriced in comparison with their prospects,

because of their ex-fans' mental anchoring in their past value.

Those "has been" artists kept a sizeable fraction of their followers.

=> They differ in this respect from stocks which were also popular but are now underpriced

after a series of disappointing business performances.

If a serious analysis shows than an earnings recovery is really in sight, those other securities

with depressed prices would better be classified in the "value stock" category.

Nu

Dates of related message(s) in the Behavioral-Finance group (*):

Year/month, d: developed / discussed, i: incidental

Numeracy bias

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Numerology

03/1i,2i,11i + see magical thinking / numbers, small numbers, numeracy bias

Number superstition

As financial matters rest on numbers, there is a tendency by some quasi-esoteric "believers" to:

Give nearly magical attributes to some salient numbers. Some examples are:

Round numbers, Fibonacci "golden" number,

Narrow "economic indicators" (Voodoo economics), past statistics that are not fully relevant

or that cover too short periods.

Base their investment decisions on such flimsy signals, although they have no relation

with the fundamentals or the state of the market.

Of course, when many people follow those indicators, self fulfilling prophecy might take place,

but this is far from being always the case.

Ob

Dates of related message(s) in the Behavioral-Finance group (*):

Year/month, d: developed/ discussed, i: incidental

Obedience to "experts"

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Objective

See goal

Observer bias

See reflexivity

Sometimes the observer changes the phenomenon it observes.

See reflexivity, self-fulfilling prophecy, self-deluding prophecy...

For example, the economic behaviors of people are obviously influenced by the economic state of affairs

in a way that either maintains or reverts that situation.

Op - Ov

Dates of related message(s) in the Behavioral-Finance group (*):

Year/month, d: developed / discussed, i: incidental

Ophelimity

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Optimism / optimistic bias, overoptimism

Due to its length, this article is in a separate page

of this "N-O" section of the Glossary

Ostrich effect

See cognitive dissonance, narrow thinking

Overconfidence, overconfident

See overconf

    

Overleverage

 

See overleverage

Overpricing / underpricing

 

See over / under

  

Overreaction / underreaction

 

   See overreact

Over-reliance

- on analysts, experts, advisors

- on management objectives

- on numbers, models

- on rules, regulations

 

See overreliance

See overreliance

See overreliance

See overreliance

    

Overtrade, overtrading

Oversimplification

  

See over / under

See over / under

  

(*) To find those messages: reach that Behavioral-Finance group and, once you are there, 1) click "messages", 2) enter your query in "search archives".

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