Investment decisions are made by investors and investment managers

Investment management

Investment management is the professional management of various securities and assets in order to meet specified investment goals for the benefit of the investors...

.

Investors commonly perform investment analysis by making use of fundamental analysis

Fundamental analysis

Fundamental analysis of a business involves analyzing its financial statements and health, its management and competitive advantages, and its competitors and markets. When applied to futures and forex, it focuses on the overall state of the economy, interest rates, production, earnings, and...

, technical analysis

Technical analysis

In finance, technical analysis is security analysis discipline for forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis incorporate technical analysis, which being an aspect of active management stands...

, screeners

Option screener

An option screener is a tool that evaluates options based on criteria and generates a list of potential trading ideas. Most people who trade options are technical traders. It essentially means they look for patterns in charts. Also they use statistical correlations and deviations and give them...

 and gut feel

Gut Feeling

"Gut Feeling" is a song by Devo. It appears on their 1978 album Q: Are We Not Men? A: We Are Devo!. The track was used on the soundtrack of the Wes Anderson film The Life Aquatic with Steve Zissou, for which Devo member Mark Mothersbaugh composed new music, and also used in the Stacy Peralta...

.

Investment decisions are often supported by decision tools. The portfolio theory is often applied to help the investor achieve a satisfactory return

Beta coefficient

In finance, the Beta of a stock or portfolio is a number describing the relation of its returns with those of the financial market as a whole.An asset has a Beta of zero if its returns change independently of changes in the market's returns...

 compared to the risk

Risk

Risk is the potential that a chosen action or activity will lead to a loss . The notion implies that a choice having an influence on the outcome exists . Potential losses themselves may also be called "risks"...

 taken.

Investment decision biases

Bad decisions are often followed by a feeling of investor's remorse

Buyer's remorse

Buyer's remorse is the sense of regret after having made a purchase. It is frequently associated with the purchase of an expensive item such as a car or house...

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See also

• Behavioral finance
  Behavioral finance
  Behavioral economics and its related area of study, behavioral finance, use social, cognitive and emotional factors in understanding the economic decisions of individuals and institutions performing economic functions, including consumers, borrowers and investors, and their effects on market...
  
  
• Cognitive bias
  Cognitive bias
  A cognitive bias is a pattern of deviation in judgment that occurs in particular situations. Implicit in the concept of a "pattern of deviation" is a standard of comparison; this may be the judgment of people outside those particular situations, or may be a set of independently verifiable...
  
  
• Relative strength
  Relative strength
  Relative strength is a ratio of a stock price to a market average. It is used in technical analysis.It is not to be confused with Relative Strength Index....
  
  
• Ratio analysis

External references

• Born To Sell for investment decisions regarding covered calls