What Some Financial Advisors Say
Financial advisors often agree that investors have poor timing, becoming less risk averse when markets are high and more risk averse when markets are low. This is consistent with recency bias and seems contrary to the acrophobia explanation. "The only problem is that, unlike Mr. Spock of Star Trek fame, humans are not entirely rational beings."
Proponents of the efficient-market hypothesis claim that prices reflect all available information. EMH assumes that investors are highly intelligent and perfectly rational. However, others dispute this assumption. "Of course, we know stocks don't work that way." In particular, proponents of behavioral finance claim that investors are irrational but their biases are consistent and predictable.
Read more about this topic: Market Timing
Famous quotes containing the words financial and/or advisors:
“The woman who does her job for society inside the four walls of her home must not be considered by her husband or anyone else an economic “dependent,” reaching out her hands in mendicant fashion for financial help.”
—Mary Barnett Gilson (1877–?)
“Whoever gives advice to the sick gains a sense of superiority over them, no matter whether his advice is accepted or rejected. That is why sick people who are sensitive and proud hate their advisors even more than their illnesses.”
—Friedrich Nietzsche (1844–1900)