The Behavioural Investor's Analysis Framework

Behavioural analysis is unique among the six frameworks: it analyses the investor as much as the investment. Before asking "is this security mispriced?" it asks "why might the market be mispricing this, and am I vulnerable to the same biases that are creating the mispricing?" The discipline is simultaneously outward-facing (identifying market mispricings caused by bias) and inward-facing (preventing your own biases from corrupting the analysis).

Why This Matters

Unlike frameworks that focus on business fundamentals or price patterns, the behavioural framework focuses on the psychological dynamics surrounding a security. It asks: what emotional narrative is dominating this security's price? What bias is most likely driving the mispricing? And what systematic checklist can I use to ensure I am analysing this situation with System 2 thinking, not System 1? The framework has two components: an opportunistic screen (identifying securities likely to be mispriced due to identifiable biases) and a decision audit (examining your own analysis process to identify where bias may have crept in).