Obviously, I didn't like this book, but I'm exceptionally biased. I'll try to make my reaction understandable to those I imagine finding this book attractive.
First,I was offended by the title itself. 'Behavioral Finance' is an important area of economic research. Leading books in the field include The Winner's Curse by Richard H. Thaler , Advances in Behavioral Finance, Thaler (editor) and Inefficient Markets: An Introduction to Behavioral Finance (Clarendon Lectures in Economics), by Andrei Shleifer. The basic argument of Thaler and Shleifer involves what has come to be known as efficient market theory. Advocates of 'behavioral finance' have been attacking the efficient market hypothesis for 20 years without making much headway in academia. Now, everyone knows markets are ineffienct, just look at the ability of corporate America to buy political advantage, but you won't find that taught in 'higher' institutions of learning.
Now, this little book seems to be doing a nice volume of business by usurping the name by which Thaler, Shleifer and others have been working under for 20 years. Does Goldberg offer any credit to the trail blazers? No. This is simply Goldburg and von Nitzsch's personal effort. In the context of previous efforts in Behavioral Finance, the authors ramble on and on without making any useful points. They do not offer any insights to the body of behavioral finance research. They try to talk as if they know something about trading, but at best their experiences are those of an amateur. The book has none of the rigor I expect from the field.
If the book had been titled, 'Psychology of financial agents,' I would have been non-pulsed. The psychology of financial agents is a fascinating field and perhaps the material in this book has respectable insights into psychology. For example, the author's comments on the 'triune brain' seem an interesting insight into human psychology. The authors conclude there are three kinds of investors: the 'gut person', the 'heart person' and the 'head person'. Goldberg and von Nitzsch's take on psychology isn't mine, but it certainly fits under the umbrella of traditional psychology. I just don't think it has much to do with the field of 'Behavioral Finance.'
