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Ep. 035: Does Market Timing Work with Dr. Meir Statman

by | Sep 17, 2018

It’s as tempting a strategy as playing the lottery, but does market timing work? In this interview with professor of finance Dr. Meir Statman we discuss if market timing does work, how to manage financial temptations, how to use behavioral finance to your advantage, and how this relates to cryptocurrency assets.

So I decided to go to the wayback machine and dust off an interview I did with Meir Statman, author of a Wall Street Journal article called, “The Mistakes We Make and Why We Make Them,” for my radio show, all the way back in October of 2009… roughly 6 months after the markets had bottomed.

Being an interview from 2009, Bitcoin wasn’t even a glimmer in Satoshi Nakamoto’s eye yet. But everything we say about the stock market is equally applicable to cryptoassets since, as I keep reminding you, just because crypto is a new asset class, it is still just an asset class and all the same rules of investing still apply.

Moreover, there are a lot of parallels between the time period Meir and I are talking about, with the extreme exuberance of the dot com bubble, that bubble bursting and everyone declaring the Internet was dead, then the market recovering, then the depths of despair of the financial crisis in 2008 and 2009, with many people swearing off the markets entirely as rigged or unwinnable, leading up to the market highs we are still at to this very day.

Just to give you a quick background on my guest, Dr. Meir Statman is the Glenn Klimek Professor of Finance at Santa Clara University. His research focuses on behavioral finance. He attempts to understand how investors and managers make financial decisions and how these decisions are reflected in financial markets. His most recent book is “Finance for Normal People: How Investors and Markets Behave,” published by Oxford University Press.

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 “Good advisors are more managers of investors than investments.”

- Meir Statman

Professor of Finance, Santa Clara University

In this week’s conversation, we talk about:

✓ How behavioral finance helps us understand the investment decisions we make

✓ Why market timing is so seductive, even when we know better

✓ Why investment success stories are as misleading as lottery success stories

✓ Why neither fear or exuberance are good investment guides

✓ How structure helps manage fear and greed

✓ What to look for in an investment advisor or mentor

TO DIVE DEEPER INTO MARKET TIMING:

Meir Statman – LinkedIn

Meir Statman – Twitter

The Mistakes We Make and Why We Make Them – Wall Street Journal

Finance for Normal People: How Investors and Markets Behave – Meir Statman

QUESTIONS OR FEEDBACK:

Email: askkim@sanecrypto.com
Twitter: @sanecrypto https://twitter.com/sanecrypto

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