Episode 6: Behavioral Economics and how you can benefit, with Richardson GMP's Chris Kerlow

The Frontier

Chris graduated from Saint Mary’s University with a Bachelor of Commerce Degree, double majoring in finance and entrepreneurship. He began his career with Scotia Asset Management in 2008 and had progressing roles before becoming a senior analyst in the Investment Consulting Group. Chris was awarded the Chartered Financial Analyst (CFA) designation in 2012 and is now an equity Portfolio Manager with Richardson GMP. In addition, Chris is now teaching finance at the Lazaridis school of business and economics at Wilfred Laurier. 0:00 Opening 1:47 What is the study of behavioral economics? How does it differ from traditional economic thinking? 4:28 Understanding now that humans aren’t technically “rational” in the traditional vacuum-economic sense, what are some of the aspects that make us “irrational”? a. More specifically, what are some of the most important biases that impact investor behavior in the marketplace? 13:15 Presumably not everyone has every bias, or, more delicately put, not every person has the same bias to the same extent. Do people generally have the same biases? Or would something like risk tolerance, which seems to be the differentiator for investors, have a role to play in the biases I have? 16:16 At Richardson GMP, you co-manage the Redwood Behavioral Opportunities Fund, which incorporates these behavioral economics aspects into the trading strategy. Why do you believe this is a winning strategy? 20:16 How do you identify when behavioral bias is affecting a stock’s value, and that there is an opportunity capitalize on it? 34:10 What is one piece of advice you would like to leave our listeners with for investing on their own? 35:55 Closing