This interactive discussion covered the consequences for an investment firm of internalizing a behavioral economics mindset. Accepting our human nature will have significant impact on our understanding of the global economy. This has consequences for organization design, culture, strategic asset allocation and manager selection. There are no silver bullets, but there are ways to become a better investor in an uncertain and largely unpredictable world.
The presentation highlighted how our human nature influence the decisions that we make as investors. It is about the soft factor that drives the hard results.
- Diversity in both models and people are central to better understand the world. Individual behavioral biases and group dynamics are crucial factors impacting our decisions. It is easy to say, but difficult to internalize in an organization.
Four examples to have discussed:
- What are the challenges of only using the neo-classical toolbox?
- What are the unintended consequences of investment guidelines?
- Can scenario thinking help us construct more robust investment portfolios?
- What to look for in an external manager, in addition to the hard data?
Speaker : Stefan Lundbergh is Director of Cardano Insignts and a non-executive board member of the Fourth Swedish National Pension Fund(AP4).