Fooled by Randomness: Investment returns – skills versus chance

An interview with Professor Dr. Martin Weber, University of Mannheim

Investors overestimate the importance of skill and underestimate the role of chance in investment returns. That is the key finding of a study conducted by Professor Dr. Martin Weber of the University of Mannheim, Business School.  In a short video interview, he provides insight into his study “Fooled by Randomness: Investor Perception of Fund Manager Skill.” Professor Weber found that most investors base their decision on past performances. However, they are “fooled by randomness” when chasing returns of actively managed funds. In addition, most investors do not take into account the actual abilities of the fund manager. Past returns are no guarantee for future returns. Professor Dr. Martin Weber is the holder of the Chair of Finance, with a specialization in Banking, at the University of Mannheim, Business School. His research focus lies on the empirical research on capital markets, experimental economics and decision theory.

Visit Professor Martin Weber’s Chair of Finance and Banking faculty site

The Council on Business & Society Global Alliance is an ongoing international dialogue between six of the world’s leading business schools and an organiser of Forums focusing on issues at the crossroads of business and society – The Council Community helps bring together business leaders, academics, students and journalists from around the world. #CouncilonBusinessandSociety

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s