To understand why investors make mistakes, Cary Frydman once put traders and portfolio managers in a brain scanner.
As they made investment decisions, Frydman, an associate professor at the USC Marshall School of Business, noticed that when the stocks they sold subsequently went up, an area of the brain associated with regret began to switch on. The bigger the price increase, the bigger the signal – and the investors that experienced the most regret made the biggest mistakes. Their wounded
Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.
To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe
You are currently unable to print this content. Please contact info@risk.net to find out more.
You are currently unable to copy this content. Please contact info@risk.net to find out more.
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Printing this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
Copyright Infopro Digital Limited. All rights reserved.
You may share this content using our article tools. Copying this content is for the sole use of the Authorised User (named subscriber), as outlined in our terms and conditions - https://www.infopro-insight.com/terms-conditions/insight-subscriptions/
If you would like to purchase additional rights please email info@risk.net
More on Investing
The signs of tacit collusion in the dividend play trade
Game theory and real-world data point to a different understanding of how arbitrage in markets works
Slicing algos blamed for market impact on dark venues
Fragmented markets contribute to sixfold jump in possible price moves
Legal & General to launch ABS funds amid rising pension demand
After 2022 gilt crisis, trustees and consultants turn to asset-backed securities to bolster portfolio liquidity and returns
EU index managers face funding risks as US moves to T+1
Rotations from European to US assets will need prefunding due to slower EU settlement
Decades of history says you can beat high inflation with quality
Factors such as momentum and value generally outperform the market irrespective of inflation, but new research suggests quality stocks are best when prices are rising rapidly
The race to build hyper-personalised investing
Direct indexing is taking off, but how far can it scale?
NAIC cracks down on risky feeder funds
Vehicles have been used by insurers to invest in ‘weird and wonderful’ assets, say practitioners
Quants are using language models to map what causes what
GPT-4 does a surprisingly good job of separating causation from correlation
Most read
- As FCMs dwindle, regulators fear systemic risk
- Top 10 operational risks for 2024
- Top 10 op risks: AI fears drive cyber risk to record high