Contributions: 1a. Investors profiles

Thanks to Jan, Nemo and Seervas for their communications on
investors categories and profiles
.
Even if contagions are frequent, a typology of the different investor behaviors
is a promising area of research

(also detailed in the Behavioral finance glossary).

 

1) There is first the famous "investment styles" dichotomies between:

"Momentum / trend investors"

<=> vs. "Fundamentalists"


and also "Growth investing"

<=> vs. "Value investing"

2) We can go into more details by crossing types of investment behaviors

with sociological families (psychographic). This allows to study:

For an individual investor, its money personality traits

For any investor segment,

* its content (types of institutions or private persons),

* its risk attitude (cautious - risk averse, gambler - risk seeker...), <

* its investment motivation and horizon (short / long term),

* its style (momentum / value / contrarian / intuitive / passive / active /
   diversifier / stock picker ...),

* its education, experience, information access, financial power,

* and so on.

How these investor groups could be somewhat linked to image categories,

The timing of each segment's intervention, and their interactions.

This could throw some light on the images' origins, their "life cycles" and also
the "distribution"
and "accumulation" phases in the stock market.

This can also help, by using agent-based neural network software's, to simulate the
market.

And, last but not least, help each investor to know what makes it tick.

Communication from Jan (Leif Ericssen), 22 Nov. 1999

I believe it's quite possible that your archetypical concepts will lead to develop
a framework that describes and predicts effectively - if crudely -the actions of

Diverse sets of market actors (investors, traders)

in relation to specific types of firms

in a given market environment

to the point where we may anticipate these kinds of investors and the way they will
react better than they will themselves
.

Not to mention understanding anomalous market behavior from a unique view.
I've long thought that
high activity and volatility events in stocks of firms going
through change was the action of:

investors with one set of attitudes and expectations

selling to investors with a different world view.

Of course, any buyer of any stock thinks differently from the seller in some way.

But I'm suggesting that rather than canceling out individually, set#1 accumulates

what set#2 is distributing over time because of their very different perceptions

and "betting" with each other in the aggregate over the firm.

This "group pattern" will be different from that of Denise, 26 years old with a
career and starting out in life,
buying a growth stock that Dennis, 56, just sold
yesterday because after all he's at the top of his profession and it's time to cash
in on his successes, not pressing his luck.

They're both rationally considering risk - and both winning.

Communication from Nemo, 24 Nov. 1999
nemo13@boursorama.com (translated from French)

Here is my map for the wild wide stock market. A large territory spreading over
three climatic zones: plains, altiplano and cordillera. The wild-life varies from
a region to the other.

Some species belong to several zones, other are endemic on only one.

The cordillera is the realm of three species: "funds of mental" gods,
   "hussars" warriors and horrible "hyenas".

The altiplano hosts tribes of peace-loving "people with private means"
   and gentle "sheep". 

It is also haunted by neighboring castes of "determinists" and "vultures",
sorts of flying hyenas.

In the plains, where the bulk of the population live, clans replace tribes.
   No alliances here, just consensus or fads.

Here again we find the "people with private means", with determinists
and sheep.

"Gamblers" and "believers" also appear.

Clans and tribes may be identified by their hunting pattern and mystical practices.

Some venerate TA, others MA, FA, -.. there are quite a few divinities!

Magi, soothsayers and other oracles are teeming. At times, their converts entertain
gory street fights.

Animism practice is common .

Some display a bear face on their livery

 Others, a bull frontal, not preventing them from wearing a bearskin amulet under it!
Each clan lay offerings for the "funds of mental" gods to get protection from
murderous raids by "hussars", with "hyenas" in their wake.

Here and there in some oases, the "lone ones" live. Often well-armed, watchful and
experienced old males.

They knew how to dig their hole. They make their egg-nest grow without attracting
the greed of those with more power than them.

A fearsome world. But exciting, as it makes it possible to measure oneself.

So, one last question, brother investors, did you recognize yourself in one of these
snapshots?

Communication from Jan (Leif Ericssen),
   30 Nov. 1999 (Extracts)

I would like to explore the behavior of superior fundamentalist investors (SFIs),
defined for now as practicing approaches based on fundamental stock selection, and
getting above market performance.

I believe SFIs roughly follow either growth or value strategies, and rarely can shift
from one or another.

For example,

A "value" investor (SFI) is a "contrarian" or a "special situations" expert.

It buys shares/bonds of firms in trouble for the recovery, takeover or insolvency.

A "growth" investor looks for firms with potential growth in earnings and
   net worth,
that will make today's price cheap.

Superior results come from riding successful firms for years. Advantage: a high
compound % gain. Disadvantage: serious drops in down markets.

Question is, can SFIs be empirically identified and their behavior deduced from
observation?

Communication from servaas de kock, 8 sep, 2003

www.ips-online.co.za/articles.html (Extracts)

Money Personality Profile - The Nine Money Personalities

Kathleen Gurney of the Financial Psychology Corporation produced a classification
that stresses money style and how individuals react emotionally to financial decisions.

Her typology defines 9 personalities based on 13 personality traits.

The system highlights a client's personality type through psychometric testing.

 

Kathleen Gurney's money personality types and money

personality traits (more details at:
http://groups.yahoo.com/group/Behavioral-Finance/message/5683
)

The 9 personality types

The 13 personality traits

# Safety Players

# Entrepreneurs

# Optimists

# Hunters
# Achievers

# Perfectionists

# Producers

# High Rollers

# Money Masters





1. Involvement

2. Pride

3. Emotionality

4. Altruism

5. Confidence

6. Power

7. Work ethic

8. Contentment

9. Risk taking

10. Self determination

11. Spending

12. Reflectivity

13. Trust

 

By learning about investment personalities, advisors can help clients to make
decisions

that will not only provide financial reward but emotional stability.

Without this knowledge, clients often rely on unconscious beliefs and life-long
habits to guide their actions, they don't take conscious control of their money.

separ

 This page last update: 26/04/13

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