Financial advisors are every bit as susceptible to the Recency Effect as everyone else. Extrapolating a future based on the immediate past has been elevated to something of an art form among those whose job it is to plan for (if not bet on) the future on behalf of their clients.
Jason Zweig has a must-read piece up today on the Recency Effect for his Intelligent Investor column over at the WSJ:
Decision Research, a nonprofit think tank in Eugene, Ore., has conducted a nationwide online survey of investors seven times since 2008. These surveys have shown that investors’ forecasts of future returns go up after the market has risen and down after it has fallen.
William Burns, an analyst at Decision Research, says investors’ forecasts of the market’s return over the coming year were heavily swayed by how stocks performed in the previous month.
So take the below with a grain of salt, but understand its importance as you see dips like Friday’s continue to be bought. The guys with the buying power are now in the bull camp.
After a strong January for the markets, financial advisors have turned sharply more bullish for 2012, according to two surveys conducted by SEI Advisor Network in mid-January and again in early-February…
The survey was completed by more than 100 advisors, the majority of whom manage more than $50 million in assets. Some key statistics from the February survey are:
- 90% of advisors predicted positive return for S&P 500 in 2012 (a 18% increase from results in mid-January)
- 50% increase of advisors predicting gains of greater than 5% in S&P 500 from January to February
- More than 33% predict that the “Pessimism Bubble” will burst in 2012
- Nearly 33% said “the tide is turning” for the economy
- Most accurate phrases to describe today’s investing world: “Bull markets climb walls of worry,” and “A rising tide lifts all boats”
- 87% say likelihood of payroll tax cuts being extended beyond February have a 50/50 chance, or better
According to the research cited in Jason’s piece, 40% of people use the recent past as their predictor while another 40% or so say that what’s happened in the recent past is about to revert back the other way. Everyone else just says the future is random or unknowable. I wonder what that research would look like were it conducted on just FAs who handle other peoples money…
Sources:
This is Your Brain on a Hot Streak (WSJ)
marrakech desert tours 1 day
[…]Sites of interest we’ve a link to[…]
adam n eve toys
[…]Sites of interest we have a link to[…]
adam and eve promo
[…]one of our guests a short while ago proposed the following website[…]
adam eve deal
[…]Wonderful story, reckoned we could combine several unrelated information, nonetheless really really worth taking a search, whoa did a single understand about Mid East has got much more problerms too […]
huggy shipyard
[…]here are some links to internet sites that we link to simply because we feel they are worth visiting[…]
foam dipped sparring warrior kicks
[…]Wonderful story, reckoned we could combine a handful of unrelated information, nevertheless genuinely really worth taking a look, whoa did one particular learn about Mid East has got a lot more problerms as well […]
Brazilian Hair
[…]Here are a number of the sites we advise for our visitors[…]
porn movie
[…]The info mentioned within the write-up are several of the ideal readily available […]
porn movie
[…]The data mentioned within the write-up are some of the most beneficial offered […]
Remy Hair Extensions Wholesale
[…]Wonderful story, reckoned we could combine several unrelated information, nevertheless actually worth taking a search, whoa did 1 find out about Mid East has got additional problerms too […]
Milky Way Hair Wholesale
[…]one of our guests recently proposed the following website[…]
Peruvian Hair Wholesale
[…]Sites of interest we have a link to[…]
Malaysian Hair Wholesale
[…]just beneath, are various completely not related web-sites to ours, even so, they’re certainly worth going over[…]
Indian Hair Wholesale
[…]one of our visitors lately advised the following website[…]
latinas al poder
[…]very couple of sites that happen to become in depth beneath, from our point of view are undoubtedly nicely worth checking out[…]