Dozen things about investing from Richard Thaler

Recently an article published on Bloomberg, Richard Thaler is not only a famous economist and author, but is also blogpart of a very successful fund, the 70-year-old University of Chicago professor, whose stock-picking theories drive the Undiscovered Managers Behavioral Value Fund, is getting discovered in more ways than one:

  1. “Behavioral economics [is] a field that only exists because regular economics is based on an idealized economic agent, sometimes called Homo Economicus. In the book we refer to such creatures as Econs. Econs are creatures that can calculate like a super computer, never get tempted by fatty or sweet foods, never get distracted, and probably aren’t a whole lot of fun to be around. In contrast, real people, who in the book we call humans, don’t make any appearance in standard economics. Behavioral economics is economics about humans.  Continue reading “Dozen things about investing from Richard Thaler”

Who is the enemy of Investors ?

History shows that mutual fund investors generally increase inflows after observing periods of strong performance. blogThey buy at high prices when future expected returns are lower, and they sell after observing periods of poor performance when future expected returns are now higher.

This results in what author Carl Richards called the “behavior gap,” in which investor returns are well below the returns of the funds in which they invest. Perhaps with this observation in mind, Warren Buffett once said, “The most important quality for an investor is temperament, not intellect.” Continue reading “Who is the enemy of Investors ?”

The Investors – Behavior Gap

History shows that mutual fund investors generally increase inflows after observing periods of strong performance. They

Beach PL - Generation Gap

buy at high prices when future expected returns are lower, and they sell after observing periods of poor performance when future expected returns are now higher.

This results in what author Carl Richards called the “behavior gap,” in which investor returns are well below the returns of the funds in which they invest. Perhaps with this observation in mind, Warren Buffett once said, “The most important quality for an investor is temperament, not intellect.”  Continue reading “The Investors – Behavior Gap”