STEPHEN CRANSTON: A culture change
The investment heroes of today are no longer the glamorous stock-picking geniuses
I have always been far more interested in the behavioural, psychological aspects of fund management than the matchstick-counting quantitative ones. I first came across behaviourism in summer school at the University of Maryland where we looked at professor BF Skinner’s experiments with rats. The rats in the videos certainly looked more in control of their surroundings than most of the stockbrokers and fund managers I have come across. More recently I have been impressed by Dan Ariely, who popularised the video in which people concentrate so hard on counting the number of passes in a basketball game that they don’t notice a gorilla coming onto the court. An interesting variation of not seeing the wood for the trees. Dan Kemp, the chief investment officer for the European time zones at Morningstar, talks of System 1 and System 2 approaches. System 1 people rely on instinct and prefer gut feel to hard work. System 2 people may not be as creative, but they are reflective problem-solvers...
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