2. On the next page is a summary of an interview with Russell Fuller, a fund...

 

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2. On the next page is a summary of an interview with Russell Fuller, a fund manager with a behavioral finance approach to investing. Analyze the interview by covering the points below. I want your perspective, informed by the material in this class. Hint: these are anomalies for the rationalist paradigm. Recall what rationalists assert 1) about individual market participants and 2) about the operation of the market. a) What individual level anomaly is described by Fuller? Why is it an anomaly? (5 points) b) What the market anomaly is described by Fuller? Why is it an anomaly? (5 points) c) After this interview has been published, what would Burton Malkiel (author of Random Walk down Wall Street), Eugene Fama (Creator of EMH), and other skeptics predict will happen to Fuller's ability to pick stocks over time (increase, decrease or stay the same) using the anomaly mentioned in the responses to questions Q2 and Q3? Briefly justify your answer. (5 points) MIND GAMES: A MANAGER SEEKS PROFITS BY PLUMBING ANALYSTS PSYCHES Money, April, 1998, Vol. 27, Issue 4 Here's one way to stay ahead of the market: read people's minds. That, in a sense, is the tactic of former finance professor Russ Fuller, who uses the principles of behavioral psychology to try to one-up Wall Street's analysts. Don't laugh: Fuller has racked up annualized gains of 26.9% over the past five years in the private accounts he manages. Now he's applying the same techniques at the Undiscovered Managers Behavioral Growth Fund. The portfolio is currently available to institutions and through some financial planners. MONEY's Pat Regnier recently went head to head with Fuller, so to speak, and found that there is some logic to his theories. (U of Chicago professor Richard Thaler is a partner in the firm of Fuller-Thaler Asset Management Inc.) (Note. Analysts are experts who study individual companies and industries. Many investors base their stock buying and selling decisions on analyst recommendations. Thus, demand for a stock and its selling price are affected by analyst recommendations.) 2. On the next page is a summary of an interview with Russell Fuller, a fund manager with a behavioral finance approach to investing. Analyze the interview by covering the points below. I want your perspective, informed by the material in this class. Hint: these are anomalies for the rationalist paradigm. Recall what rationalists assert 1) about individual market participants and 2) about the operation of the market. a) What individual level anomaly is described by Fuller? Why is it an anomaly? (5 points) b) What the market anomaly is described by Fuller? Why is it an anomaly? (5 points) c) After this interview has been published, what would Burton Malkiel (author of Random Walk down Wall Street), Eugene Fama (Creator of EMH), and other skeptics predict will happen to Fuller's ability to pick stocks over time (increase, decrease or stay the same) using the anomaly mentioned in the responses to questions Q2 and Q3? Briefly justify your answer. (5 points) MIND GAMES: A MANAGER SEEKS PROFITS BY PLUMBING ANALYSTS PSYCHES Money, April, 1998, Vol. 27, Issue 4 Here's one way to stay ahead of the market: read people's minds. That, in a sense, is the tactic of former finance professor Russ Fuller, who uses the principles of behavioral psychology to try to one-up Wall Street's analysts. Don't laugh: Fuller has racked up annualized gains of 26.9% over the past five years in the private accounts he manages. Now he's applying the same techniques at the Undiscovered Managers Behavioral Growth Fund. The portfolio is currently available to institutions and through some financial planners. MONEY's Pat Regnier recently went head to head with Fuller, so to speak, and found that there is some logic to his theories. (U of Chicago professor Richard Thaler is a partner in the firm of Fuller-Thaler Asset Management Inc.) (Note. Analysts are experts who study individual companies and industries. Many investors base their stock buying and selling decisions on analyst recommendations. Thus, demand for a stock and its selling price are affected by analyst recommendations.)

Answer rating: 100% (QA)

a Based on Fullers synergetic geometry his lifelong exploration of natures principles of design the geodesic dome was the result of his revolutionary discoveries about balancing compression and tensio... View the full answer