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Do Financial Experts Make Better Decisions Than the Rest of Us?
Old 10-27-2014, 04:23 PM   #1
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Do Financial Experts Make Better Decisions Than the Rest of Us?

Not necessarily, reports Atlantic Monthly. (At least in Sweden.)

Do Financial Experts Make Better Decisions Than the Rest of Us? - The Atlantic

"A new study spells more bad news for mutual-fund managers. It looks at 84 mutual-fund managers in Sweden and how they do when it comes to their own finances. This is the first study to look directly at fund managers' stock portfolios, real-estate ownership, total wealth, and personality in order to study whether extensive knowledge and day-to-day interaction with the stock market improves one's personal wealth.

The results were striking: The researchers found no evidence that these financial experts make better investments than peers of similar age, income, and education background—casting doubt on how much value is added by so-called expertise."
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Old 10-27-2014, 04:28 PM   #2
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No surprises there.
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Old 10-27-2014, 05:05 PM   #3
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That's why they need to bleed off 1% or more off from your portfolio.
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Old 10-27-2014, 08:37 PM   #4
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No different than when you see a doctor who is significantly overweight and smoking.
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Old 10-27-2014, 09:15 PM   #5
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Quote:
Originally Posted by soupcxan View Post
No different than when you see a doctor who is significantly overweight and smoking.
... which is rare I think. I have seen more smoking nurses, but they are not overweight. The overweight ones tend to be non-smokers.
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Old 10-27-2014, 11:39 PM   #6
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I do not consider mutual fund managers to be financial experts, just financial professionals.

Warren Buffett and Charlie Munger are financial experts.
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Old 10-28-2014, 08:46 AM   #7
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Financial experts are people who can finance not working.

Full stop.


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Old 10-28-2014, 10:07 AM   #8
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I'm a retired actuary and I do think that the things I learned about compound interest really stuck with me and emphasized the power of compounding, why it was important to save early, etc. I was also able to construct a pretty straightforward Excel spreadsheet with variable assumptions about rates of return and inflation that served as a guide the last 10 years before I retired. It wasn't as fancy as the on-line calculators but I knew exactly what the assumptions (explicit and implicit) were. I have a similar one now that I'm retired to project cash flow and withdrawal rates.

It's not a guarantee, of course. I know one actuary who retired to engage in day-trading and ended up going back to work PT. Another was profiled in a NY Times article at the worst part of the financial crisis: he'd retired after all his fancy models showed it would be OK and then after the markets plummeted he decided to go look for work again. The people on the actuarial Board I frequent weren't very nice in their comments about him.
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