Investor Types

Question

@sophie (or anyone)

Please, please, please tell me that we don't have to know the specifics of the various investor type classifications (ie. Barnwell, BBK, etc.). The relevant LOS (9a) reads: "Explain the uses and limitations of classifying investors into various types" and I am taking this to mean that we need to be able to discuss the general idea of these models, but not expected to be able to identify a "Friendly Follower" or "Active Accumulating Adventurer" or "Beta Borrowing Bunny" or "Tangency Tomato" or  whatever other crap has befouled the first 10 or so pages of Reading 9.

It's not that I am unable to learn. After all, I have committed to memory all sorts of irrelevant details in my pursuit of this designation. Rather, I object on moral grounds to the obligation to sully my mind with this pathetic excuse for "curriculum". If I have to fail this exam because I refuse to acknowledge any value in this stuff, that is the price I am willing to pay. There are some things in this life that do not justify compromising one's integrity. Yes, I want the CFA designation, but not at this price.

Actually, the entire section on Behavioural Finance is largely a waste. I mean, yes, Traditional finance people are objectively insane because their core beliefs are build on a foundation of assumptions that have no basis in reality. So I want to disagree with them, I really do. And Behavioural finance might have started out with good intentions of pointing out the ridiculous flaws in Traditional finance, but now it's just a competition to see what insane "bias" you can attach your name to and use as the basis for your entire academic career.

I had forgotten how angry this stuff made me when I originally covered it. Sure, it probably won't show up on the exam, but I'm angry at CFAI for even including it in the curriculum.

Sophie Macon · Answer

And Behavioural finance might have started out with good intentions of pointing out the ridiculous flaws in Traditional finance, but now it's just a competition to see what insane "bias" you can attach your name to and use as the basis for your entire academic career.

Hehe, I felt this way too on behavioural finance as I learned way more interesting stuff outside the curriculum, and the aspects included in CFA, as you rightly highlighted here, seems rather, um useless in the grand scheme of things.

Can you remind me in more detail what this section entails? I don't seem to recall the words Barnwell etc. I thought there'd be in general 4 types of investors, which is covered in my answer here under #3. Investor types.

padniaki · Answer

Actually, the entire section on Behavioural Finance is largely a waste. I mean, yes, Traditional finance people are objectively insane because their core beliefs are build on a foundation of assumptions that have no basis in reality. So I want to disagree with them, I really do. And Behavioural finance might have started out with good intentions of pointing out the ridiculous flaws in Traditional finance, but now it's just a competition to see what insane "bias" you can attach your name to and use as the basis for your entire academic career.

I had forgotten how angry this stuff made me when I originally covered it. Sure, it probably won't show up on the exam, but I'm angry at CFAI for even including it in the curriculum.

I am actually extremely glad that they covered behavioral finance, as I feel it is a very relevant topic. I understand your frustration, but I think behavioral finance cannot be ignored. For a more practical treatment, check out Jason Zweig's book "Your Money and Your Brain." Outstanding book.