Who is Morningstar?
Morningstar have 5230 employees in 27 countries worldwide, providing local marketplace expertise.
Morningstar hold more than $220 billion in Assets under Management and Advisement worldwide.
In a world where we are constantly concerned about Macro (and Micro) news flow and GEO politics we are often, as investors and ‘humans’, driven by the most basic of human emotions…. Fear and Greed.
You will know that there are often conflicting views in relation to the global economy which, in turn, drives investment market sentiment, although sentiment is not always driven by the fundamentals of the markets. (This again relates to fear and greed). There is often a disconnect between Economic risk and Market risk.
I therefore thought that I would share (with the permission of Morningstar) their tutorial; although cutting out the full detail of the study course, so to keep you interested in this SEXY subject!
When the markets drop, do you get a tinge of fear? Do you feel regret and a little envious if you hear that other investors have been more speculative than you and the investment made has paid off?
Investing is more than a mathematical analysis of risk and return. It’s a struggle with ourselves; to tune out irrelevant information, to have the strength to stick to the plan and to resist the urge to follow the herd (except, of course, when it knows better than we do!).
We’re all Human
Over the last decade, a different approach has started to emerge within behavioural science – one that accepts the fact that we’re all human. We’re all imperfect (apart from the writer!). We have a limited attention span and an unlimited capacity to screw things up.
Behavioural scientists study how our fundamental wiring as human beings drives our behaviour and how that can undermine our potential to build wealth in the markets over time. Instead of denying our limitations, researchers are learning how we can work with (or around) our human nature to become more informed investors.
INVESTING IS SIMPLE, BUT NOT EASY – Warren Buffett
The guide is titled ‘Simple, but not easy’ – which adopts the famous quote from Warren Buffett on how the basic logic of investing is simple, but our psychology and emotions trip us up.
Another imperative to know is the quote from Warren Buffett that again famously states that ‘Price is what you pay, value is what you get’ – this refers to a number of points in the process of financial planning and the outcome of learning and results.
Attached are the slides for your reading… This is the simple bit!!
Click here- Morningstar_Behavioural_Science
As always, if you have any financial planning questions, simply get in touch.
Best Price FS Team
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