Fear and greed: Human nature in investing

Famed investor David Dreman once said: "The rational man - like the Loch Ness monster - is sighted often, but photographed rarely." We subscribe to the idea, intuitive to most, that investors can be irrational and driven by fear and greed. By extension, we also do not believe that markets are perfectly efficient and instantaneously reflect all publicly available information. We believe that investors are driven by behavioural biases that lead to a divergence between price and fair value. Let's look at three components of how a behavioural finance-driven investment process can work to ...