Poll: Have Behavioral Finance Precepts Improved Your Investment Results?
In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked readers whether implementing behavioral finance principles in their investment practice has meaningfully improved results.
Has implementation of behavioral finance precepts into your investment practice meaningfully improved your results?
Among the three possible answers given, 48.25% of respondents indicated that they have not implemented behavioral finance at their investment firms. Although this may seem surprising, a consistent criticism of behavioral finance is its lack of a unifying theory. In other words, although behavioral finance observations of cognitive biases are descriptive, they do not necessarily suggest how to take advantage of these biases or how to avoid them.
That said, a majority of respondents (51.75%) stated that they have incorporated behavioral finance tenets at their investment firms. Among this group, 44% reported success in implementation, whereas 7.75% stated that they have not achieved success.
Perhaps recent works by Greg B. Davies and Arnaud de Servigny (Behavioral Investment Management) and Daniel Kahneman (Thinking, Fast and Slow) will not only increase implementation of behavioral finance but also improve results. Also, CFA Institute is hosting a forum, Behavioral Finance: From Theory to Practice, that may aid interested practitioners.
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.