Valuation-Informed Indexing #120 — Behavioral Finance Hasn’t Amounted to Much (Yet)

I’ve posted Entry #120 to my weekly Valuation-Informed Indexing column at the Value Walk site. It’s called Behavioral Finance Hasn’t Amounted to Much (Yet).

Juicy Excerpt: I think the problem is that most of the people working in the Behavioral Finance School are academics. They are smart. They love doing research. They enjoy helping people. They obtain satisfaction from generating insights. But they don’t manage portfolios. They don’t solicit clients or seek to retain them. They don’t head up mutual funds. They don’t market themselves or their ideas.

Because of all this, they are not taken seriously by the Big Shot moneymakers who dominate the investing advice field. Behavioral Finance ideas are sometimes discussed in investing publications. But usually in a patronizing way. The Behavioral Finance people are permitted to advance their ideas. But only to the extent that they do not conflict with the more serious (we are led to believe) advice advanced by the “professionals.”

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