How Our Physical Health Impacts Our Trading Psychology

*  Recent research suggests that a sedentary lifestyle–one without exercise–is more harmful to our health than smoking, diabetes, or high blood pressure.  The lack of aerobic fitness is a larger risk factor for mortality than having many medical conditions that we regard as necessary to treat. *  Poor posture, such as sitting hunched over a screen for…

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Have Institutional Investors Spoiled the Hedge Fund Party?

Hedge fund performance has declined precipitously since the 1990s as assets under management have exploded. The managers are not solely to blame. While alpha has withered, large institutional investors have piled into large hedge fund managers that are perceived to be safe — an industry transformation beautifully summarized by Blackstone Group: The original hedge fund clients,…

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Sensation Seeking and Hedge Funds

ABSTRACT We show that motivated by sensation seeking, hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns, resulting in lower Sharpe ratios, information ratios, and alphas. Moreover, sensation‐seeking managers trade more frequently, actively, and unconventionally, and prefer lottery‐like stocks. We show further that some investors…

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