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Behavioral finance, real life

Corné van Zeijl

SNS Asset Management

Content

1. Examples of behavioral finance in everyday life

2. Are investment professionals better than private investors?

3. How we use market sentiment as timing tool

1.Examples of behavioral finance in

everyday life

1.What did you do when BP halved in

market value?

1. At the end of the half year it gets

interesting.

1. What happened?

April – may: many, many unknows

June: You do not want to explain this to your clients

Juli: Overshooting, so value investors buy

1. Could you be a contrarian?

A disaster, try to make some basic assumptions, what the real

damage could be.

Try to find out why share price has fallen so much.

Is it enough or is it too little?

Will this factor remain in place?

Are you sure this is the main factor?

Why could you be wrong?

Could it damage your career?

ACTION !

1. ASML, this is why momentum works Quote: It simply hurts to buy here

Holders want to stick to this winner

Non-Holders feel regret

and want to be part of this success too

1. Think ahead

How will you feel if the share price rises further?

Can you manage this, emotionally?

What will drive share price higher?

Why will it fall, what could be the trigger?

What is the fundamental value?

Who does not agree with you and ask this person, why?

1. Loss aversion by UK government

1. Go with the crowd

Relative p/e Nestlé Unilever

1. Relative performance of Nestlé

Unilever

1. We see correlations, even if they are

not there

1.Trade-off Unibail – Corio, mainly influenced by yld diff Bunds vs Eurobonds

1. Not anymore

1. Weak British Pound =

outperformance of Wolters vs Reed

1. Correlation AEGON vs US bond

yields

1. Consumer confidence vs p/e S&P500.

Is there a correlation?

1. Inflow equity funds vs p/e S&P500.

Is there a correlation?

1. Inflow equity funds vs S&P500.

Is there a correlation?

1. Fear in 2008. Right or wrong?

Ronald Gerritsen: Ik heb wel eens gedacht

We houden het niet

2. Experts are better investors than

private investors

2.Monthly expectations vs actual

outcome

2. Stock picks private investors (long /

short portfolio)

www.iex.nl

2. But experts are of course much

better…

2.Yes they are, experts vs. private

investors

3. How we use sentiment as market

timing tool

29

3. Bull/Bear vs S&P 500

30

3. Call/put ratio vs S&P 500

3. Expectations US consumers for the

stock market vs S&P 500

3. VIX as anxiety meter

Conclusion

1. Yes, there is value to be found in Behavioral Finance,

but it is difficult to capitalise, as we are humans our selves

2. Yes, investment professionals are better than private investors,

or better said, less bad

3. We think sentiment can be used as timing instrument,

but it is not easy.