10 questions everyone should ask their investment manager
By Cristian Angeloni, 1 Nov 19
UK wealth management boutique demystifies investing myths and investor behaviour
Click through the slides below to find out more
Never act out of impulse or gut feelings because the industry has probably already adjusted to the latest news and, chances are, many investors might behave the same way.
Does acting on news and forecasts result in better performance?
“There is an intuition that, if an investor closely monitors news and forecasts, they can use this information to achieve better performance. But in developed markets, this idea is mostly a fallacy.
“Academic research shows that even with perfect knowledge of, for example, where GDP growth will be at the end of the year, there is no correlation between that knowledge and the stock market.
“This is because what we don’t know is already known to some other industry participants. So even if you listen to a forecast immediately when it’s released, it has almost certainly been incorporated into securities prices.”
Do successful business people make good investors?
“The average high net worth client tends to invest poorly – this is an empirical fact. As a successful entrepreneur, you would probably be best served by doing the exact opposite of your instincts when it comes to investing.
“Anytime you have intuitions that markets are likely to go down, or you feel uncertainty and fear …. don’t act on it. This is because research shows that if you feel a certain way, other people probably feel the same.
“If you’re reacting to news then you’re already too late, and other people have already overreacted to it anyway. To take this scenario a bit further, you might even want to buy if you’re inclined to sell, and vice versa.”
Tags: Henderson Rowe
