Behavioral Finance

Home/Posts/Research Insights/Behavioral Finance

Active Versus Passive for the US and the Canadian Markets

By |2017-08-18T17:10:53-04:00February 7th, 2017|Behavioral Finance, Active and Passive Investing, ETF Investing|

We all hear about the massive move away from active to passive in the US market. We also hear arguments that passive may eat the world and that active management is a zero sum game [...]

Book Review — Loaded: Money, Psychology, and How to Get Ahead…

By |2017-08-18T17:09:08-04:00January 16th, 2017|Book Reviews, Behavioral Finance|

A few months ago I had the pleasure of hearing Sarah Newcomb speak at a recent Morningstar ETF conference. She was extraordinary. Although I only caught the last 20 minutes of her talk, she had [...]

Value investing is quite possibly the worst idea…EVER

By |2020-02-21T09:35:08-05:00September 14th, 2016|Research Insights, Behavioral Finance, Value Investing Research|

We believe deeply in the value philosophy as first described by Ben Graham: view stocks as ownership in a firm; buy with a margin of safety; avoid stories; think independently; and so forth. In fact, [...]

Behavioral Finance Must See: Thaler’s 2016 Presidential Address

By |2017-08-18T17:09:31-04:00July 1st, 2016|Behavioral Finance|

This is a great video to watch over the holiday weekend. Prof. Thaler does a great job walking through behavioral finance/economics. He also has a paper on related topics: Behavioral Economics: Past, Present and Future [...]

Leveraging Persuasion Science to Nudge Investors in a Better Direction

By |2017-08-18T17:01:25-04:00June 22nd, 2016|Behavioral Finance|

Making choices can be difficult, but possible alternatives can be arranged in a way that facilitates effective decision-making. This is the idea behind “choice architecture,” an concept that is explored in the book, “Nudge,” by [...]

Want to Know the Secret to Inefficient Prices? Lazy Prices.

By |2017-08-18T16:52:52-04:00June 13th, 2016|Research Insights, Behavioral Finance|

How do you handle repetitive tasks? If you're like most people, you work through a task in a variety of ways, find the most efficient approach, and then stick to that workflow. Consider email address autofill, automatic [...]

Behavioral Finance Strikes Again: Contrast Effects in Financial Markets

By |2017-08-18T17:09:30-04:00May 19th, 2016|Research Insights, Behavioral Finance|

At this point, even hard core efficient market fans will likely admit that behavior can influence investment decisions. Humans aren't robots. However, just because some investors exhibit bad behavior that doesn't mean they can influence prices. As the story [...]

Book Review — The Drunkard’s Walk: How Randomness Rules Our Lives

By |2017-08-18T17:09:06-04:00May 10th, 2016|Research Insights, Book Reviews, Behavioral Finance|

Although randomness is all around us, we often fail to recognize the profound role it plays in our lives. Evolutionary biology and faulty intuition lead us to make mistakes that can radically distort our perception of [...]

Alternative Beta can be Great: But Beware of Data-Mining!

By |2017-08-18T17:10:40-04:00May 9th, 2016|Research Insights, Behavioral Finance|

Quantifying Backtest Overfitting in Alternative Beta Strategies Antti Suhonen, Matthias Lennkh, and Fabrice Perez A version of the paper can be found here. Want a summary of academic papers with alpha? Check out our Academic Research Recap [...]

How Testosterone and Stress Affect Financial Decision-Making

By |2017-08-18T17:03:31-04:00May 3rd, 2016|Behavioral Finance|

Decision Making, Financial Risk Aversion and Behavioral Biases: The Role of Testosterone and Stress Nofsinger, Patterson and Daigler A version of the paper can be found here Want a summary of academic papers with alpha? Check [...]

Computers Still Beat Humans? We Ask, Will Grove Responds.

By |2017-08-18T17:07:56-04:00April 21st, 2016|Behavioral Finance|

Overconfidence is the death of everything in investing. I suffer from the problem just like everyone else because last time I checked...I'm human. As humans, we need to face the reality of overconfidence. Overconfidence is like [...]

Recreating Asset Bubbles in the Laboratory

By |2017-08-18T16:58:00-04:00March 29th, 2016|Research Insights, Behavioral Finance, Momentum Investing Research|

Are we in a bubble? It depends on what asset class you’re referring to, whom you ask, and what you mean by “bubble.” We’ve posted before on how some great finance minds define bubbles, and [...]

Why do academic researchers avoid behavioral finance?

By |2017-08-18T16:52:14-04:00March 11th, 2016|Behavioral Finance|

Charlie Munger, Warren Buffett's right-hand-man and Vice Chairman of Berkshire Hathaway, has said the following regarding behavioral economics: How could economics not be behavioral? If it isn’t behavioral, what the hell is it? Apparently, academic researchers [...]

Chasing Returns and Avoiding “Spaghetti against the Wall Fund Companies”

By |2017-08-18T17:08:13-04:00February 20th, 2016|Behavioral Finance|

Psychology research suggests that when we make predictions, we suffer from “representative bias,” and mistakenly overweight observations that fit a particular narrative, and fail to consider base rate probabilities. For example,  if we flip a coin 5 times [...]

Shocking: Your Experience in the Uterus May Influence Your Investment Decisions!

By |2017-08-18T16:57:00-04:00February 16th, 2016|Research Insights, Behavioral Finance|

The Fetal Origins Hypothesis in Finance: Prenatal Environment, the Gender Gap, and Investor Behavior Cronqvist, Previtero et al. A version of the paper can be found here. Want a summary of academic papers with alpha? Check [...]

Media Coverage and Stock Returns

By |2017-08-18T17:00:55-04:00February 9th, 2016|Research Insights, Behavioral Finance, Momentum Investing Research|

Ninety Years of Media Coverage and the Cross-Section of Stock Returns Hillert and Ungeheuer A version of the paper can be found here. Want a summary of academic papers with alpha? Check out our Academic Research Recap [...]

Can A Brutal Stock Market Make You Physically Sick?

By |2017-08-18T17:08:32-04:00February 6th, 2016|Research Insights, Behavioral Finance|

Worrying About the Stock Market: Evidence from the Hospital Admissions Engelberg and Parsons A version of the paper can be found here. Want a summary of academic papers with alpha? Check out our Academic Research Recap [...]

The most concise explanation of behavioral finance I’ve ever seen

By |2017-08-18T16:55:27-04:00January 29th, 2016|Research Insights, Behavioral Finance|

One of the most overused-- and misunderstood -- terms I've seen used by finance practitioners is "behavioral finance." Many professionals consider themselves to be "behavioral finance experts" because they identify irrational investors.1 Newsflash: Identifying irrational investors is not [...]

Go to Top