Institutional Efficiency?
Having hopefully now established that behavioural bias in finance isn’t a figment of various researchers’ fevered imaginations we still need to think about whether the total market might, possibly, be a bit efficient. For even though psychological maladaptation seems to be everywhere we look this still doesn’t show that markets might not be basically sensible under the covers.
Consider that in the US over 50% of the monies invested in markets aren’t under the control, even by proxy, of demented, short-term private investors. No, in fact the majority of investment funds are under directed by a relatively small number of people – so-called plan sponsors – who are responsible for how institutional groups invest their cash. As they’re responsible for over six trillion dollars worth of investments these people matter – a lot – but fortunately, as they’re professionals, we can sleep comfortably knowing that markets are basically in safe hands.
That’s a joke. Kind of. Sort of. Ha ha.
Having hopefully now established that behavioural bias in finance isn’t a figment of various researchers’ fevered imaginations we still need to think about whether the total market might, possibly, be a bit efficient. For even though psychological maladaptation seems to be everywhere we look this still doesn’t show that markets might not be basically sensible under the covers.
Consider that in the US over 50% of the monies invested in markets aren’t under the control, even by proxy, of demented, short-term private investors. No, in fact the majority of investment funds are under directed by a relatively small number of people – so-called plan sponsors – who are responsible for how institutional groups invest their cash. As they’re responsible for over six trillion dollars worth of investments these people matter – a lot – but fortunately, as they’re professionals, we can sleep comfortably knowing that markets are basically in safe hands.
That’s a joke. Kind of. Sort of. Ha ha.