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)
Adam and Eve Coupon Code
[…]Wonderful story, reckoned we could combine a handful of unrelated data, nonetheless seriously worth taking a appear, whoa did one understand about Mid East has got extra problerms also […]
windows 7
[…]Every as soon as inside a while we choose blogs that we read. Listed beneath are the latest web pages that we pick out […]
dual sex massager
[…]always a large fan of linking to bloggers that I love but do not get quite a bit of link adore from[…]
Best Way to Use a Pocket Pussy
[…]please go to the sites we adhere to, which includes this one, because it represents our picks from the web[…]
Realistic Masturbators
[…]Sites of interest we have a link to[…]
sasha grey
[…]Every after in a although we pick blogs that we read. Listed below would be the newest web-sites that we pick out […]
Canada Sex Toys
[…]we like to honor lots of other internet web pages on the net, even if they arent linked to us, by linking to them. Beneath are some webpages really worth checking out[…]
How to Use a Rabbit Vibrator
[…]we like to honor several other web web-sites on the net, even if they arent linked to us, by linking to them. Under are some webpages worth checking out[…]
vibrator for women
[…]we came across a cool web page that you may get pleasure from. Take a search in case you want[…]
realistic dildo
[…]although web-sites we backlink to below are considerably not associated to ours, we really feel they’re in fact really worth a go by means of, so possess a look[…]
shane diesel realistic dong
[…]Here are a few of the internet sites we advocate for our visitors[…]
Hiking Cape Town
[…]very couple of sites that come about to be comprehensive below, from our point of view are undoubtedly properly really worth checking out[…]
12bet ying
[…]just beneath, are various entirely not related internet sites to ours, having said that, they are surely really worth going over[…]
Pet Supplies
[…]one of our visitors just lately advised the following website[…]
sex toys kit
[…]we like to honor a lot of other world-wide-web sites on the internet, even though they arent linked to us, by linking to them. Underneath are some webpages really worth checking out[…]