When people are presented with uncertain gains, they tend to choose the ‘surer’ thing. On the other hand, presented with losses, they tend to take a chance
Let’s begin by assuming that Nobel Prizes point to brilliance. Throughout the 1990s, the creators of so-called ‘modern portfolio theory’ and proponents of capital market efficiency seemed to run away with all the Nobel Prizes in Economic Science: Markowitz, Sharpe, Miller, Merton, Lucas, Mundell and Scholes. All have become household names (at least in investment houses) and all are strong devotees of market rationality.
Following are five tips designed to help informed professionals better serve a relatively uninformed but very interested clientele. The tips are consistent with sound retirement planning and explicit regard for the technical and psychological needs of the individual investor.
[This article has been reprinted, with permission, from Rotman Management, the magazine of the University of Toronto's Rotman School of Management]