The Folklore of Knowledge

A Day in the Life of an Investment Professional 

June 2016

When it comes to investing for the long term, emotions and cognition can strongly influence our decisions.

Investors often think of themselves as rational creatures – fully aware of their assumptions and beliefs – who align their underlying values with their investments. But unconscious thoughts and beliefs affect investment behavior more than they may realize. In The Folklore of Finance,* we found that traditions and customs slowly calcify into investment wisdom. Wisdom we should question from time to time. So how can investors make better-informed decisions?

We’ve taken a look at the challenges related to the decision-making process, the way investors understand the market, communications with stakeholders, and how teams and leaders within the investment community act. As investors, if we can learn to master our emotions and automatic responses in these situations, we may just be able to make better-informed decisions.


*State Street Center for Applied Research, The Folklore of Finance: How Beliefs and Behaviors Sabotage Success in the Investment Management Industry, 2014