Study of investment risks: Who’s driving the Porsche, bad

cars reveal a lot about their owners. Carriage is at the neighbors to a family in the Garage, one suspects: Junior announces. Will, by contrast, creates a second Porsche, this indicates other priorities.

Dennis Kremer

editor in the area of “money & More” the Frankfurt General Sunday newspaper.

F. A. Z.

Stephen Brown, Yan Lu, Sugata Ray, and Melvyn Teo, four financial market, researchers from America and Singapore, wanted to know more about this and have asked a simple question: What is the car of one of the Fund Manager on its investment qualities? Amazing much more, as a self-impressed kitchen psychologists would have you believe. Now, you could twist the eyes to the scientific rigor of such studies doubt.

But the fact that the financial economists, highly respected “Journal of Finance” has published the investigation, speaks for itself. The result in short form: The athletic and PS-the heavier the car, the ferry, a Fund Manager, the more risky he invests the money of its customers. This could be possibly right. The Problem, however, is that this additional risk does not come in higher returns paid. Instead, it is the Fund Manager with the boring car, despite a generally not very exciting strategy, a better value of development.

The researchers expected their study with a risk-return measure, says that the common investors have little, of the so-called Sharpe Ratio. Finance Professor Stefan Mittnik, Ludwig-Maximilians-University of Munich, therefore, for the F. A. S. the trouble, this information is in the form of concrete Numbers to convert. The result is striking:

would be Similar fluctuations in the portfolio values, provided the Fund Manager with sports cars currently on average, a return of five percent per year. Money managers with supposedly boring Minivan in the Garage to achieve, however, an average Annual increase of 13 percent. Over a period of ten years considered, this means that the Conservative to multiply the assets by 250 percent, while the risk of Fund Manager market will achieve only a quarter of these gains.

extramarital Affairs and houses on credit

The researchers even managed to put the engine of performance and value development of the Fund in relation to each other: an additional 100 HP to diminish thereafter, the annual yield an average of one percentage point. Now you ask, how do the scientists want to know exactly what cars to individual Fund managers. Their results are based solely on information from America, where in the public databases is free, you can view which cars are registered to someone. These data, matched them with the names of about 1100 American hedge Fund managers, the funds can already create a little more free than normal managers. What are the car brands to the Manager, unfortunately, will not tell, the cars are classified as either sporty, or as a solid-boring. But you can’t think that a Porsche belongs in the latter category.

But could it not be that the Fund managers can be seduced by other financial incentives such as bonuses to a riskier investment strategy, and that this has everything to do with the car? The researchers conclude by means of complex calculations and Tests. According to them, it is for the Fans of fast cars among the managers in order to people, for which the term “Sensation Seeking” to be true.