Meir Statman, professor of finance at Santa Clara University (California, United States), is an academic reference in behavioral finance, a field that attempts to understand how we make our savings and investment decisions. Does fear dominate them? Excessive confidence? Blind faith that everything will work out for us? Statman published, with the help of Ibercaja, The value of well-beingwhich is not a typical finance textbook, but a book that addresses both financial issues and those related to family, social and even spiritual life. He went to Madrid to present it and had time to chat with elEconomista.es.
In a country like Spain, where citizens are more inclined to buy an apartment with their savings than to invest them in the stock market, “perhaps the only good thing that Bitcoin has brought is that it is a way for people to invest more in stocks.” in general”, he comments. In Meir Statman’s investment portfolio, there is not a single cryptobut this professor recognizes that, in a small proportion, they can work well.
This 77-year-old columnist Wall Street Journalalso understands the appeal of brick: “You can touch real estate, and the tenant pays you rent. Sometimes he calls you to bother you because the toilet is clogged, but you still perceive it as something solid. And it takes time to people get used to it.” “Word of mouth also helps; if your friends invest in stocks, you’ll probably be encouraged to do the same.
“The less we operate, the better”
Statman defends passive management rather than active management, that is, investing in index vehicles – funds that reproduce the behavior of stock indices in exchange for low commissions – instead of paying a professional manager who tries to detect the best opportunities. “My portfolio is completely passive. By investing in index funds, you earn more than the average investor. I don’t touch my investment, I let it happen. The market goes up? Well, I don’t do anything. What Is this wrong? Neither one nor the other. The less you operate, the better. He trade It’s expensive, there are commissions. And you risk negotiating with someone who has more information than you. »he warns.
This last question is fundamental, and it is the big mistake that many individual investors make, underlines this doctor from Columbia University. “What people don’t understand is that TO DO trade It’s like playing tennis against Djokovic or Nadal. There’s someone on the other side of the network. When you buy stocks, someone is selling them. That someone This may be a professional or a manager of a hedge fundor a manager holding inside information. If you don’t have this information, the best thing to do is buy and hold,” he advises.
Meir Statman was born in 1947 in a displaced persons camp in Germany, the son of Holocaust survivors. In 1949, the family arrived in Israel. Years later, after graduating from the Hebrew University of Jerusalem with a degree in economics and statistics, where he also earned a master’s degree in business administration, he got a job as a financial analyst at a large company. It didn’t take long for him to become demotivated. In the book he explains how one morning he called his work to say he wasn’t coming back. He and his wife, Navah, made a drastic change in their lives by moving to New York to study a doctorate at Columbia University, taking advantage of scholarships available to foreign students.
Do you want to take risks? Have a child!
Investing involves risks, but the biggest ones are not in the stock market: “If you want to take real risks, get married! And if you want more, have children”; people get married and some get divorced; others have children who suffer from health problems. There are risks in all of these areas. » In his book, Statman says that Barbara, his eldest daughter, suffered from bipolar disorder, but that it took years to diagnose. “They told us that his difficulties came from family dynamics; It seemed the only question left to answer was whether it was Navah’s fault or mine. We let anxiety seep into our marriage,” he admits. He also talks about friendship and its loss. “Sometimes losing a good friend is harder than getting divorced.” And losing your job, “or choosing a career and realizing that it’s not for you, that you made a mistake and that this job is not for you. In his case, he left a job that he didn’t like and.” was able to reorient his career, which, he explains, has been a fundamental pillar for his happiness and for the person “If you ask me who I am, a husband, a father and I am a teacher,” he adds.
The value of well-being – A holistic approach to behavioral finance, by Lettera Publicaciones, consists of 15 chapters that address issues as diverse as financial capital, saving and spending, investment, dating and marriage, widowhood and divorce, work or education. Statman’s research was published in the Journal of Finance, Journal of Financial Economics, Review of Financial Studies, Journal of Financial and Quantitative Analysis, Financial Analysts Journal, Journal of Portfolio Management, and many other specialized magazines. It has received support from the National Science Foundation, the CFA Institute Research Foundation, and the Investment and Wealth Institute (IWI).
