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Abstract
Typical asset managers operate within standard finance, wherein investors are described as rational, or within the first generation of behavioral finance, wherein they are described as irrational. Asset managers do well, however, to operate within the second generation of behavioral finance, presented briefly here and in detail in the author’s book Finance for Normal People. That generation describes investors as normal, with a wide range of normal wants, such as hope for riches and freedom from the fear of poverty, being true to values, and gaining high social status. Asset managers who enter the second generation of behavioral finance understand the importance of marketing in identifying investors’ wants, and they understand the importance of educating investors about financial facts and human behavior and helping them avoid errors on the way to satisfying wants.
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