Saturday, January 15, 2011

Who Made Money from 2000-2010? The Personality Traits of Successful Investors During the Stock Market's "Lost Decade"

Given the tumult of the market over the past decade, and the fact that such markets are likely to be a norm of sorts (although we believe the current bull market can continue for a long while before the next downturn), we thought it would be a good time to see what YOU, our readers and clients could teach us about how you crashed, survived, or even thrived over the past decade.  In particular, we wanted to know how WHO you are has affected your investing, and how that may have contributed to your performance.

We prepared a 7-page white paper about the traits of successful investors based on results from 2,600 investors who took our investing personality test from 2005-2010.  You can access the paper here.  I hope you find it as fascinating to read as it was to research.  The abstract follows.

"While much has been written about the economic toll of the 2008-2009 financial crisis, few studies have examined the psychological traits of those who thrived in the financial markets of the past decade. Over the past five years data on investment performance, risk management, and behavior was gathered in conjunction with an online personality test on the website www.marketpsych.com. In this paper we are reporting the results of 2,600 individuals who took the “Investing Personality Test” from 2005-2010. The Investing Personality Test includes 60 items from the IPIP-NEO, an open-source personality test based on the “Big Five” factor model. After completing the 60 items, investors who took the test disclosed financial statistics including their prior five year investment returns, largest loss in the prior five years, and made decisions in a series of hypothetical investment scenarios. The authors are publishing these results as a contribution to financial and investment educational programs. Our wish is that the results of this research may help more investors thrive in the coming decades."

You may download the paper here:  http://www.marketpsych.com/20110115_Traits-Of-Successful-Investors_MarketPsychWhitePaper.pdf

Please contact Richard L. Peterson MD with questions or comments about this study at rpeterson@marketpsych.com (beware strict spam filter) or +1.310.573.8523.

Happy Investing!
Richard

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