The fund managers using Nobel-winning theories to get rich
Some active managers are applying behavioural finance theories such as those developed by Richard Thaler to beat the market
Oslo — Human beings tend to have biases. Knowing how to read those can make you very rich. During a recent interview in Oslo, Stacey Nutt, the CEO of asset management firm ClariVest Asset Management talked about the way behavioural economics is helping his portfolio managers beat the market. Nutt says the trick is to go for "under-appreciated fundamental trends". "Fundamental movement but not a lot of excitement. That’s an interesting combination for us," he said in the Norwegian capital last week. "When there’s still, what I would call, a blanket of cynicism, that kind of resides over those trends." The notion that investors can beat the market has met with a good deal of scepticism of late. But some active managers are now trying to get ahead by applying behavioural finance theories such as those developed by Nobel laureates Richard Thaler (co-author of Nudge) and Daniel Kahneman. These asset managers try to avoid behavioural biases in their own decisions, while capitalising on th...
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