Man versus math: Behaviorist exploration of post-crisis non-banking asset management

Rationalists may argue that the best way to manage an investment portfolio is to use risk-balancing strategies such as asset class diversification. Positivists would likely insist on probabilistic concepts – perhaps a mean-variance statistical technique. A third less-studied approach in the financial literature is to apply a behaviorist philosophy such as heuristics or rating the quality of the management team. An interesting variation is to study the behavior of effective asset managers, particularly their methodologies, and then imitate those best-practices. This is a fundamental principle underlying case studies, ethnography, grounded theory and other interpretative research philosophies, so it was useful to apply it to study the investment discipline. Furthermore, extant financial studies predated, or tested data before, the global financial crisis, which may invalidate older models. Therefore, the researcher interviewed 39 non-banking asset managers from high-performing NYSE-listed companies to explore their perception that current portfolio management techniques would be effective in volatile financial markets. A statistically significant asymmetric plot was produced, which revealed gender and market outlook were key factors.