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Learning that drives better investment decisions

Debating a Harvard Professor’s Criticisms of the Finance Industry

By Andrew Stotz | Apr 15, 2015

A recent article in The New York Times Upshot section by the Harvard economist, Professor Sendhil Mullainathan, titled, “Why a Harvard Professor Has Mixed Feelings When Students Take Jobs in Finance” was a weak attempt at arguing the case that finance professionals add little to no value to society and that people working in the industry are mainly carrying out immoral or illegal acts.

This is my reply.

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Majority of Investors Drive their Portfolios without a Diversification Seatbelt

By Andrew Stotz | Apr 8, 2015

It’s a choice that’s nearly a matter of financial life or death. Deciding the right number of stocks to hold in your portfolio is a balance between risk and return – too few and your risk is high, too many and you might as well own a broad market fund or ETF. Research shows that the average active investor owns only two! That’s far too low.

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Trading is Still Hazardous to Your Wealth

By Alexander Wetterling | Apr 6, 2015

So you think you are an above-average investor? Svenson (1981) asked Americans and Swedes whether they were above-average drivers. His findings were that more than 90% of Americans and about 70% of Swedes thought of themselves to be more skillful drivers than the average. The impossibility of these perceptions demonstrates the existence of overconfidence bias among humans.

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Profit from Pessimism: Finding Value When a Company’s Outlook is Poor

By Andrew Stotz | Apr 3, 2015

My research covering 4,000 companies across the world shows that, over the past 22 years, financial analysts have been wrong in their earnings forecasts about 33% of the time.

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