Tag Archives: behavioral finance

Low Volatility, VIX and Behavioral Finance

As this week’s award of the Nobel Prize in Economics to Richard Thaler confirmed, the existence of behavioral biases in finance is no longer a controversial theory.   People often prefer a small chance of a large gain to a near-certain chance of a small gain, even if the expected return from the latter is higher.  Read more […]

Worth Every Penny

This morning’s Wall Street Journal reports that “Investors are piling into the shares of small, risky companies at the fastest clip on record, in search of investments that promise a chance of outsize returns….”  We’ve commented on such risk-seeking behavior earlier, because it has an important bearing on the low volatility anomaly. The tendency for low-volatility or Read more […]