Scientific Financial Systems was proud to attend the CFA Society of Boston’s Annual Market Dinner event in Boston last night. It was a great turnout from the Boston investment community.
Morgan Housel delivered an excellent keynote talk about market risk and investor behavior. His talk built on the major themes from his recent book: “The Psychology of Money”. Morgan’s presentation was followed by a great Q&A session with Board Chair Heather Young.
A few takeaways from Morgan’s thought-provoking talk:
- Risk and happiness are by-products of individual expectations
Morgan noted that people were happier in the 1950s…
not because of peak economic prosperity,
but because of low wealth disparity and positive investor expectations
- Risk is biased by each individual’s unique experiences
There is a large diversity of experiences and expectations across market participants
For example, teens/20s growing up in the 1950’s
had a very different market experiences and therefore have different risk perspectives
than their younger counterparts growing up in the 1970’s
- Risk is what is left over when you think you have thought of everything
A truly powerful statement that encourages much needed introspection
As such, investors need to set their expectations and awareness accordingly
Overall, market psychology is a major, under-discussed driver of market behavior. Morgan’s comments brought recognition and improved clarity to these effects. Check out Morgan’s book for more information on these important topics.
SFS celebrates the depth of Boston’s local investment community, and we support the richness of programming provided by the Boston CFA Society.