A few lessons learned
[quote=rankstocks] Several of my points are contrarian in nature, that is definitely true. There needs to be several more studies on Behavioral Finance, as several of my points focus on emotion and behavior.
Point 9 was more of a statement than anything else. Many funds that hold up well in bear markets don’t position their portfolio’s for a recovery. The same goes for high rated funds in bull markets. Many managers don’t position themselves for some downside protection when a bear market hits. Therefore, 1-star funds often outperform when bear markets turn to bull or when bull markets turn bear. That’s generally why I like managers that tend to do well over longer periods of time that manage with consistency, and why several 2 and 3 star funds are worth owning.[/quote]
rank - have you read predictably irrational? Also, I have several peer-reviewed articles that you might want to take a look at, you can PM me. Focus heavily in Behavioral Economics/Finance. There is an (unofficial) Behavioral Economics/Finance department at Duke University.
There is a very interesting article about quantifying behavior and how it affects the market as a whole, then there are the pseudo-science ones that talk about investor psychology in very general terms.