When money anxiety increases, investors make instinctive and erroneous investment decisions.
SAN FRANCISCO, Aug. 6, 2024 /PRNewswire-PRWeb/ -- The July Money Anxiety Index, which measures the actual level of financial anxiety, rose to 49.0 – an 8.4 index points higher than July of last year. According to the scientific paper "Money Anxiety Theory - a Predictor of Equity's Performance" published by Dr. Dan Geller, when the level of money anxiety increases, investors tend to make instinctive investment decisions, which are usually wrong.
The scientific literature has established that people have two modes of financial decision – instinctive, a.k.a System 1, and analytical, a.k.a System 2. Investors alternate between the analytical and the instinctive decision modes based on the level of money anxiety. When money anxiety increases, as is the case now, investors tend to default to their instinctive decision model, thus making erroneous and costly selling decisions.
To prevent investors from making instinctive investment decisions, Dr. Dan Geller, who is a behavioral economist and a leading expert in financial modeling, developed the Scientifically Predictable investing model, which is based on two proven scientific principles – the principle of the dual-decision process, and the principle of money anxiety. The Scientifically Predictable investing model has been validated and published in Dr. Gellers latest study.
The study shows that the top five ETFs selected by the Scientifically Predictable investing model outperformed the market (S&P 500) with an alpha of 30.5% for a total return of 90.5% in five years. The study also revealed that the predictive model achieved this performance during a highly volatile market, 2018-2023 demonstrating that the hypotheses of this study are valid during bull or bear markets.
The Scientifically Predictable investing program is going to be distributed to self-directed investors through their banking institution. In addition, the Scientifically Predictable investing program is going to be available to investment institutions that want to provide their long-term investors with a passive investment product that outperforms the market with elevated level of confidence at a low cost and low maintenance.
Media Contact
Dr. Dan Geller, Analyticom, LLC, 1 415-891-3093, [email protected] , https://analyticom.com/index.html
SOURCE Analyticom, LLC
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