From Paul Ferrell's article at MarketWatch.com
Harvard Business School Prof. Max Bazerman was speaking to a conference of 75 Wall Street big shots, guys commanding six- to seven-figure incomes for managing your money. Bazerman opened by auctioning off a $100 bill. Simple rules: The highest bidder gets $100. And the second highest pays what he bid, but gets nothing. Forty hands quickly pushed the bidding to $95. Then an institutional money manager and a pension-fund trustee broke the $100 barrier, where both were guaranteed losers.
Imagine: Two of America's financial geniuses caught up in a hotly contested duel, pushing the bids up, up, up ... to $465! Bidding $465 for a $100 bill!
If you've ever doubted that investors are dominated by an irrational rat brain the professor adds this scary observation: "I've played this game perhaps 600 times, and I've never seen the bidding stop below $100." Yikes! The best and brightest managing our $8.3 trillion mutual fund industry are just as irrational as the rest of America's 95 million average folks who trust them with their money.
Imagine: Two of America's financial geniuses caught up in a hotly contested duel, pushing the bids up, up, up ... to $465! Bidding $465 for a $100 bill!
If you've ever doubted that investors are dominated by an irrational rat brain the professor adds this scary observation: "I've played this game perhaps 600 times, and I've never seen the bidding stop below $100." Yikes! The best and brightest managing our $8.3 trillion mutual fund industry are just as irrational as the rest of America's 95 million average folks who trust them with their money.
... Then, get you a shovel and dig a great big hole and throw your money in. Fill in the hole and plant geraniums on top. (NB: Do this at night while your neighbors are asleep)
(Originally posted on myspace)
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