Gustavo Ballvé on October 19th, 2009
Food for thought, Investment Themes, Mental models, Portfolio Management

The story is behavioral finance funds. Loved this quote by Chris Davis of Morningstar: “It would be really kind of ironic if you invested in a fund based on behavioral finance and you sold it after the fund had a big loss or added to it after it was up 50 percent.” (…) “It’s hard not to be human,”. Plus, one could argue that offering “behavioral finance” funds “per se” is playing to the latest buzzwords – which also sounds all too human…

This was just a quick snipe at human nature, but as your loyal servants, we also provide a few interesting links. As usual, beware “studies”, “experts” and “stats” – maintain a critical stance for each and every word you read.

Links:

An useful overview of psychological and behavioral finance, filled with links to other sources;

A September 2009 article on “Lazy funds” outperforming behavioral finance funds – Fox News;

A 2006 study on behavioral finance funds’ performance: summary and full text (just click on “Download” in this page and choose a mirror).

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