Bernstein: Psychopaths make the best investors

[intercst]

Dr. William Bernstein (author of 'Four Pillars')

"I've always believed that the best investors are somewhat psychopathic and antisocial, for much the same reason; a belief that everyone else is wrong but you is an excellent antidote to herd behavior."

http://socialize.morningstar.com/NewSocialize/asp/FullConv.asp?forumId=F100000015&convId=155516


intercst

 

[azanon]

Here's a link to the actual article:  http://www.bloomberg.com/apps/news?pid=10000102&sid=a.eCGz4Nscks&refer=uk


That's about the dumbest research ive seen.   Even a rudimentary understanding of probabilities would have had someone betting every round.   Being "brain damanged" should have lessened the likelihood one would have bet, because the educated, normal functioning man would have bet every time.

But on point, I believe such an investor is referred to as a Contarian.  Its certainly a logical approach, but not notably superior to other approaches (see how the contrarian at MSN is performing, for instance).  Its also a form of market timing, and it has been well documented that market timing doesn't work.

The folks at tsptalk.com are practicing market timing as we speak, and as you might expect, the forum leader who does post his results continues to trail the "trained monkey"   (20% to each fund).    All that work and he isnt even breaking even to the autopilot approach.   In fact, the last time i checked there, his compositie return was lower than each of the 5 respective funds!    Heck, that almost takes effort to pull that off!

I'm surprised Berstein is praising any form of market timing. I thought he was for a diversified portfolio and just letting it ride.

 

[Patrick]

Let's call B.T.K. and ask him where to put our money!

 

[yakers]

Just looks to me that the psychopaths are more like mechanical investing than contraian. And mechanical investing at least has the potential to be effective.
The folks at tsptalk are neat because they try different investments and so far the indexs have a better record. All my new TSP contributions are just going into a Lifestyle/target fund. I expect to roll over an old IRA into the TSP plan, at least it has low costs.