Practical analysis for investment professionals
01 March 2016

Top Five Articles from February: Hedge Funds and Behavioral Biases

Posted In: Best Of

1. Active vs. Passive Investing and the “Suckers at the Poker Table” Fallacy

Druce Vertes, CFA, conducts a simple thought experiment: What would happen if everyone was a passive investor except Warren Buffett?

2. Hedge Funds: What Are They Good For?

Hedge fund exposure fails to deliver for investors due to exorbitant fees, high competition, the ineffectiveness of active management, and a general misunderstanding of the underlying exposures and correlations (i.e., hedge funds don’t hedge). But the purpose of hedge funds from the perspective of the manager, parent company, consultants, and brokerages is to collect fees. In that sense, hedge funds have been a huge success each and every year, says Peter Lazaroff, CFA, CFP.

3. Behavioral Biases: What Is the Weakest Link in the Investment Profession?

How vulnerable are the various classes of investment decision makers to behavioral biases? Is there a difference in the degree to which they are susceptible? We conducted a CFA Institute Financial NewsBrief poll to find out. Shreenivas Kunte, CFA, provides his analysis of the results.

4. Where Do You Fit on Your Organization’s Nine-Box Grid?

It is important to understand how you fit into the talent management scheme at your organization. Not because it is important to chase the “HiPo” label, Julia VanDeren explains, but rather because it’s vital that you take responsibility for aligning the perception your organization has of you with your own career goals.

5. The Altman Z-Score in Action: Is a Bubble Building in Global Credit Markets?

Edward Altman anticipated the 2008 credit meltdown in 2007. He believes another bubble is building in credit markets today. He explains why in the final installment of his interview series with Larry Cao, CFA.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©iStockphoto.com/Diane Labombarbe

About the Author(s)
Paul McCaffrey

Paul McCaffrey is the editor of Enterprising Investor at CFA Institute. Previously, he served as an editor at the H.W. Wilson Company. His writing has appeared in Financial Planning and DailyFinance, among other publications. He holds a BA in English from Vassar College and an MA in journalism from the City University of New York (CUNY) Graduate School of Journalism.

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