Newsmakers

Meir Statman, Glenn Klimek Professor of Finance, was mentioned in an ING Ezonomics article about how to avoid bad investing. He advises investors to think more broadly about their investments and consider what do people on the other side of the trade know and think?

A quote from the article:

[Investors] ask 'is this stock attractive?' when they should be asking 'does the person on the other side of this trade know more than I do?' They have an egocentric – or self-centred – frame when they should in fact be considering other people’s points of view.

This mistake is especially big in the case of newly-floated stocks. We have overwhelming evidence that these do badly in the months after flotation. This happens because the owners of the business pick the best time to sell them – a fact which investors don’t appreciate. If they asked 'why do the people who know this business best want to sell it now?' they’d save themselves lots of money.

Find the full article here »

Learn more about Professor Meir Statman »