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Tag Archive: investor behavior


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
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The field of behavioral finance has helped us to understand that we don’t always make rational investment decisions. We often make poor decisions because of our biases. And the designers of structured product are well aware of these “flaws” in investor behavior. So they structure products that exploit our flaws.

Few points to be taken in to account :-

  • Never buy an investment product if there’s a commission attached to it.
  • Only work with an adviser who offers a fiduciary standard of care.

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