“The healthiest of markets are animated by fear and greed at the same time.”

J. Surowiecki, Wisdom of Crowds

A right balance between both fear and greed also constitutes a portfolio that can stand the test of time. This balance, however, is personal. A long term relationship kicks off with a detailed mapping of the investor’s preferences.

A silver lining of COVID-19 is that it provides ample use cases for studying investor’s behavior. In this post, we will focus on one main pillars of our approach: using behavioral smarts.

USE CASE: everyoneINVESTED evaluated more than 100 000 advisory portfolios between early January and late March, hence covering the most turbulent financial markets in years.

First, we scored and categorized investors early January based on the investor’s balance of fear and greed versus their portfolio’s balance of fear and greed.

Second, we observed how portfolios change from January to March.

We found that in January, investors with a good match were by far the most sticky: their portfolio’s hardly changed composition in March. A good match between the investor’s balance of fear and greed versus their portfolio boosts retention.

Furthermore, the mismatches we observed in January proved predictive for the portfolio changes we found in March. Our approach hence identifies and prioritizes actions that improve retention going forward.

Want to know more?
Contact us and discover how the everyoneINVESTED API toolkit offers solutions to enhance the digital investment process with this human touch. The solutions deal with investor profiling, product positioning, and, ultimately, portfolio construction.