srconstantin.github.io/2021/03/08/doe new lit review up!
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my provisional conclusion -- based on scanty data but all pointing in the same direction -- is that institutional investors who do more research get higher financial returns.
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types of "research" that correlate with investment success:
*reading portfolio companies' SEC filings
*visiting portfolio companies' factories
*doing due diligence on angel investments
*relying on "buy-side" or in-house financial analyst research
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Investors who get perfect (5/5) scores on the Cognitive Reflection Test have lower volatility for the same returns as the median investor, thus better-than-average risk-adjusted returns.
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Not included in this blog post -- maybe I'll write it up separately -- but while the evidence suggests that the median professional investor is "irrationally lazy", it looks like the median CEO is *not*.
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CEOs score MUCH higher than the general population on Big-Five Conscientiousness (which is associated with detail orientation and work ethic.) They even score higher than educated professionals like doctors, lawyers, and engineers.
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Replying to
I’d be interested in your take of the take on big 5 if you do go there in a future post
I am not crazy about Big Five, but all the other data on how CEO behaviors/traits correlate to company outcomes is *even worse*. All the other stuff measures *self-reported* company outcomes! “How would you rate your firm” stuff.
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