Читать книгу Behavioral Portfolio Management - C. Thomas Howard - Страница 11

Two threads run throughout Behavioral Portfolio Management. First, conventional wisdom regarding the markets and how to invest in them is often wrong. As Einstein said, “Common sense is nothing but a collection of misconceptions acquired by age eighteen.” As I will argue, common sense and conventional wisdom rarely lead to good investment decisions.

Second, to discover what works requires the careful analysis of large data sets over extended time periods. This kind of diligent effort is essential to uncovering those factors important for building successful portfolios. Put another way, what Daniel Kahneman calls System 1 thinking – dependence on anecdotal information and virtually automatic decision-making – is a sure route to underperformance. To be successful, it is important to turn on your slow and deliberate System 2 in order to tease out those behavioral factors critical to building successful portfolios.

As is frequently the case when discussing new ways of thinking about the world around us, it is easier to describe the final outcome than the process one needs to follow to get there. Most of the book is focused on a new way to think about financial markets and creative ways to build portfolios based on behavioral factors.

I will provide aids to help understand how to implement BPM. First, wherever possible I will provide practical suggestions on how to implement such things as releasing your own emotional brakes, as well as the emotional brakes of your clients. Much is being written about these processes and so I expect that you will have a number of suggestions available to you beyond this book.

Second, I will summarize the research underlying the transition from MPT to behavioral finance and then on to BPM so that you will not need to trace this journey for yourself by spending a great deal of time reading dense academic papers. For those who want to dig in further, I provide a comprehensive bibliography of the underlying BPM research at the end of the book.

This book is based on my 35 years in teaching, research, and actual portfolio management. I hope you find what I present useful in building a successful portfolio. And, finally, I leave you with the investor’s blessing: may you always buy low and sell high (or at least 60% of the time)!

C. Thomas Howard, Denver, Colorado, 2014