According to James Montier, a global equity strategist at Dresdner Kleinwort Wasserstein who has an interest in behavioural finance, the impaired ability of these groups to feel fear can help them to make better investment decisions because it makes them more tolerant of short-term losses. This makes them bigger risk takers in situations where risk taking is rewarded.
“Assuming that risk is rewarded in financial markets, then the best investors are likely to be those who can keep their emotions in check,” says Montier.
Hotshots
It could also explain why the archetypal hot-shot trader behaves so differently from most in polite society and why the 1980s was such a great period in the markets.
Montier also finds useful lessons for investors from animal behaviour.
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