Since the Big Short in 2008, investors have seen gains over $16 trillion.
The biggest winners in investing have been those invested in Richard Thaler’s Undiscovered Managers Behavioral Value Fund. The fund closed in 2012, but it is based on behavioral economics, a theory developed and promoted by Thaler.
So how successful is the Big Short professor?
Morningstar Inc. reports that the Undiscovered Managers Behavioral Growth Fund has averaged annual returns of 10 percent over the past 15 years. That average is enough to beat 99% of its Bloomberg peers over the past three and five year periods. And the fund’s assets doubled this past year.
Why is this important, since the fund closed in 2012? Last year, Richard Thaler released his combination memoir and history of his field named Misbehaving: The Making of Behavioral Economics, in which he outlines his theories on selecting stocks with low price-earnings ratios that signal a rebound through buy-backs and insider purchases. As with all investments, there is risk and not all stock selections perform according to the theory, but enough do to develop a strong return over the years.
A number of authors, pundits, and economists have good things to say about the book. You can get a copy of Misbehaving: The Making of Behavioral Economics at Amazon.
