Inside Trader’s Brains

Note from the Publisher:  We are always intrigued when really smart people try to figure out what attributes drive success in a specific category.  In this case, researchers from the University of Zurich and Yale School of Management have conducted a study defining what personality traits make for the best asset managers.  And really, when you come down to it, trading is the ultimate fintech, and the markets are always at the forefront of technological innovations in finance, so that makes this story a FINTECH story to us!

“Does your asset manager have the mental ability to outperform in their investments?

Researchers from the University of Zurich and Yale School of Management have suggested that success in asset management requires two kinds of intellectual strengths: analytical and ‘mentalizing’.

Analytical ability refers to a ‘person’s grasp of the quantitative aspects of a decision problem,’ including “logical reasoning and mathematical or probabilistic calculations,” explained Andreas Hefti, Steve Heinke, and Frédéric Schneider. ‘Mentalizing’ capability, meanwhile, is rooted in empathy and psychology: It explains the ability to ‘understand others’ beliefs and intentions, which helps to predict their actions.’

Both, the authors argued, are necessary for high performance in investing.”

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