Iedere belegger wil graag de markt verslaan, maar volgens businesspsycholoog en auteur Arjan Eleveld is dat per definitie onmogelijk. Ook legt hij uit waarom we de lange termijn heel belangrijk vinden maar er tegelijk moeilijk naar kunnen handelen. Eleveld gaf dit (Engelstalige) interview aan SHIFTTO.org: de social newsroom over long-term investing, powered by Kempen.

Why is having a long-term orientation important for investors?

‘The thing is: you just cannot beat the market. You and everyone else ARE the market. And furthermore, the complexity of predicting the future is just too great for all of us. Psychologist Daniel Kahneman, who won the Nobel Prize in Economic Sciences, has done some interesting research about the way people handle risk taking, such as investment decisions. He boldly states that no Fund Manager has ever proven to be better than the market. Kahneman chose a number of Fund Managers that had big successes in a certain period, and observed them over an extensive period of time. Well, if a Fund Manager was truly better than his competitors, you would expect him to be in the top every year, wouldn’t you? Actually, the correlation between rankings of investors over the years was something around 0,01, so basically nothing. In conclusion, a high ranking is brought about by a combination of factors, that in that case turns out in your favour. In other words: plain luck.

One could wonder which dynamic remains in a reality where every investor is as good as the next one. Well, the human brain has some illogical tendencies. For example, fear of loss has much more impact on us that the satisfaction of gain. This makes us want to avoid loss at almost any cost. These situations make a number of people act on emotions in an irrational way. In investing for example, make rush decisions that can cost you a lot of money. So as a successful investor, when you’re beating the market in a certain period of time, you benefit from the silly emotional behaviour of others. The same research showed that traders that make lots of decisions are less successful than ones that trade less. So, the less you act, the more you gain. From this scientific perspective this is very logical: You cannot be successful on the long term, whilst making only short-term decisions.’

How do you teach a person to act different?

‘Role models are a powerful means in changing people, probably the strongest we have at our disposal. These people appeal deeply to our unconscious processes, so I think this is one of the most important ones. In addition to that, I believe that simply discussing matters and analysing why you have made certain decisions in the past -basically by just toying with your decisions and thoughts- you will hit this unconscious level too and induce a personal learning curve.

In addition to that, it is known that people that have made a series of mistakes experience certain emotions. These emotions give them the drive to make amends and prove themselves worthy, but at the same time cloud their judgement and decision making. This contradictory situation lets someone slip into a negative spiral. In investing, you do not want people in this state responsible for your money or the future of your company. It is wise to put them on a side-line for a while. But again, learning from behaviour and situations is important, so do not discard of this people too easily. These situations can bring on change if you understand them well. ’

Why contribute to www.shiftto.org ?

‘I think it is relevant to give an insider’s view of my world and the insights that come with it. I am mostly influenced and intrigued by the recent studies that have been conducted on the topic of unconscious processes in the human brain. For example, when people make decisions or are confronted with certain things, they are pretty bad at predicting their own behaviours. But, put them in an MRI scanner, and it becomes clear what happens in their brain. These unconscious processes are important when it comes to investing or making executive decisions.

The thing is, people are actually pretty consistent in their behaviour. But it is hard to understand where this consistency comes from, when the reasons lie within the unconscious. The unconscious has a processing capacity 200,000 times the size of our conscious thinking! The only thing we consciously do is analyse and interpret our behaviour afterwards to get some understanding of who we are and why we do the things we do. Victor Lamme, professor here in Amsterdam, calls the consciousness nothing more than a ‘chatterbox’ that mindlessly follows our behaviour.

It is all about changing a way of thinking and, extended, ones behaviour. In this case: the shift to long-term and responsible investing. When talking about these kinds of change processes, it is essential to understand what initiates our behaviour in the first place. How is this anchored in the current situation, what motives do people have and how can we, with a clear understanding of these factors, truly bring about change?’

What element of your work do you find most interesting?

‘An essential element in my work is dealing with human factors in the top of organisations. An interesting part of what I do is that I get to deal with lots of different management issues. At the moment, I actually am in the middle of an evaluation of the investment committee and the role of the supervisory Board of a relatively large Dutch investor. But sometimes it is as basic as just looking over management’s shoulders as they put together a new management team, or providing advice as it comes to improving teamwork. I think the specific combination of financial considerations and management issues combined with psychology is a fascinating field of work.’

Lees meer over long-term investing op www.shiftto.org .