"Fear, Euphoria, AI: What makes us bad investors?"
SwissLife Interview with Thorsten Hens, Professor of Financial Economics at the UZH Department of Finance
SwissLife interviewed Prof. Thorsten from our department on topics including: how fear and euphoria influence investment decisions, what he believes is the biggest investment mistake, and why even artificial intelligence has blind spots.
Selected questions from the interview with Prof. Thorsten Hens:
Do we overestimate the connection between the state of the world and the stock market?
We are strongly influenced by what gets our attention. We are more aware of out-of-the-ordinary reports rather than everyday news. This can affect our perception.
And when you retire, should you take a pension or a lump sum?
Your pension should cover your required standard of living. Any savings over and above that can be taken as a lump sum to be invested further. You shouldn’t make speculative investments with the money you need for your general cost of living.
Can AI protect us from making investment mistakes?
To a certain extent. People like to sell “winning” stocks too soon and hold on to losers for too long, otherwise they would have to admit they’d made a mistake. AI, on the other hand, has no fear or shame and does not make such psychological mistakes. But it does make other mistakes.
Curious?
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