Next Meetup

West Metro Chapter November Meeting
Topic: How we make financial decisions Behavioral finance and the work of Kahneman and Tversky is all about applying critical thinking to how we make financial decisions. In response we try to avoid the traps. The real opportunities are in taking advantage of others’ irrationality, like happens in Vegas. As another example investors have an irrational (statistically unsupported) distaste for loss. Investing wisdom generally advises buying momentum as an alpha factor. Investing wisdom also advises rebalancing, which is an opposite belief in reversion to the mean. And the data says? Stocks that have been going nowhere continue to go nowhere. A few stocks going up continue to go up, but most gap down. Qualified stocks that have fallen in price, when bought in a large enough sample, have to date provided high annual returns. Current specifics will be presented. Why is this opportunity generally unknown and why is it not arbitraged away? Can we violate the laws of behavioral finance and overcome the barriers to critical thinking? Other than an irrational aversion to loss, what are the other behavioral finance findings offering opportunities for a critical thinker? Lee Wenzel has presented to our group previously on how chronic health conditions are not an insurable risk and therefore should not be financed through insurance. His background is in social work and corporate managing of behavioral health plans, policies and services. As a Registered Investment Advisor he has managed others’ investments through separate accounts since 2002. His most current interest is in the thought of Rene’ Girard and how we make decisions according to a reference group or person. Our thinking is more often rationale than rational.

RidgePointe Senior Apartments

12600 Marion Ln. W · Minnetonka, MN