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Ulysses strategy, beware the Sirens?

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Somewhat ironically, Greek mythology was used to describe the strategy for tackling the failing economy at the Behavioural Finance Forum, hosted by The Broadcast PR Business.

The best returns we can get are anxiety-adjusted returns. Investors need to develop “Ulysses strategies” to prevent themselves from being lured off-course by the Sirens of short term news events.” Behavioural Finance Forum, hosted by The Broadcast PR Business at The Gherkin, experts discussed recent financial crashes and made recommendations. Greg B Davies, head of the Barclays Behavioural Finance team, said: “Investors are always prone to boom and bust, and often make poor decisions based on unstable short-term preferences. We need to deal with the present while staying strong in pursuit of long term goals. Therefore we need to develop a set of techniques that help us deal with anxiety, as investors. The best returns we can get are anxiety-adjusted returns. Investors need to develop “Ulysses strategies” to prevent themselves from being lured off-course by the Sirens of short term news events.”

Professor Brian Scott-Quinn of The ICMA Centre, added: “Breaking up super-banks won’t save us, but many regulators still believe that we can prevent future crashes by fixing the technical problems. In 2007 / 2008 there was product complexity, mortgage fraud, moral hazard, erroneous models, and principal agent problems. These are technical problems and they can and should be fixed. Just because you have individual rationality doesn’t mean you have aggregate rationality for the whole population. Market efficiency does not necessarily imply market rationality. Those who believe in the rationality of man and mankind think that if we fix these then we solve the problem.”

The Forum brought together leading academic minds and top financial services practitioners. The participants also included: Nicola Horlick (Rockpool Investments), Philip Coggan (The Economist), Professor Raghavendra Rau (Judge Business School), Frances Hudson (Standard Life Investments), Edward Hadas (Reuters Breakingviews), Professor Mark Fenton-O’Creevy (The Open University), Dr Richard Fairchild (University of Bath), Dafydd Rees (Sky Business News), Paul Lewis (the broadcaster), Lloyd Raynor (Russell Investments), Emily Haisley (Barclays), Joe Rundle (ETX Capital), Simon Yun-Farmbrough (Fenchurch Advisory Partners).

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