New training to help investors cut their losses
Investors could soon train their brains to let go of bad investments and cut their losses, with a new program developed by Monash University researchers aiming to teach people how to make better financial decisions.
The findings, led by Dr Kristian Rotaru from Monash Business School, start with overcoming the natural unwillingness to walk away without making a profit.
Rotaru said the theory applies to any market where assets can appreciate or depreciate, including cars and property, and it was tested on individuals investing both their own capital and the capital of others.
“Once you really want to help someone, you become a more ‘procedurally rational’ decision maker – with a tendency to follow a specific strategy that could be potentially explained to the client,” he said.
“People may not find it as easy to convince their client to hold on to a losing asset for too long in the hope of market reversal.”
Rotaru said the next step was to train people to become better decision-makers, especially those investing on behalf of other people.
AUTHOR
Anastasia Santoreneos
Recommended for you
The new financial year has got off to a strong start in adviser gains, helped by new entrants, after heavy losses sustained in June.
Michael McCorry, chief investment officer at BlackRock Australia, has detailed how investors are reconsidering their 60/40 portfolios as macro uncertainty highlight the benefits of liquid alternatives.
Having reset its market focus to high-net-worth advisers, Praemium’s administration solution has been selected by Bell Potter in a deal that increases the platform's funds under administration by $6 billion.
High transition rates from financial advisers have helped Netwealth’s funds under administration rise by $3.7 billion in the fourth quarter of FY25.
