Greg Davies: Investment returns are in the eye of the behaviour-holder

Three investment journeys

clock • 4 min read

Classical finance asks us to believe the investment journey does not matter but, writes Greg Davies, ignoring strong intuitions of the investors who have to endure the journey is always a mistake

When is the same investment return not the same investment return? In the following graph are three investment journeys. They all start and end in the same place. Without overthinking it, what is your intuitive answer to the following questions: Which investor would be happiest with their returns at the end? And which journey would you rather have experienced? Which investor would be happiest with their returns at the end? Source: Oxford Risk These are simple questions, with a complicated range of answers. For more than a decade now, I have shown this graph to thousands of people...

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