A Noble Prize winner had some sobering comments today for hundreds of financial professionals at the IMCA 2015 New York Consultants conference in Manhattan.
You and your clients know less about investing than you think. Keep brilliant investing ideas to a minimum. Don’t overtrade. Passive management is often best. Most investment forecasts miss the mark. Hindsight will often fool both investors and advisors. That’s caused by putting the past in an optimistic light, forgetting mistakes and playing up seemingly correct calls. And luck, not enlightened management, can be often a huge factor in strong investment returns as well as Super Bowl victories.
Those were some of the comments of Daniel Kahneman, the father of behavioral economics and the winner of the 2002 Nobel Prize in economics.