Categorical Versus Stock-specific Thinking
July 30, 2013 - Animal Spirits
How much do equity investors leave on the table by focusing on categories of stocks (industry or style) and paying little attention to individual stocks? In her July 2013 paper entitled “Categorical Thinking in Portfolio Choice”, Swasti Gupta-Mukherjee investigates whether such simplifying categorical thinking is economically beneficial and what factors magnify or diminish it. She… Keep Reading