Nobel laureate Daniel Kahneman is not a fan of stock picking.
So when he spoke to financial advisers at a conference Tuesday, he had one simple piece of advice: stop trying to guess the future.
Kahneman spoke at the keynote address at the New York Consultants Conference of financial advisers on Tuesday.
A report of Kahneman’s talk, via InvestmentNews’ Trevor Hunnicutt: “You live in a world in which experience is possible,” he said of financial markets.
“Expertise that supports intuition about the future — that’s not possible.”
Kahneman is famously against stock picking, the essential and complicated process that money managers use to decide which stocks go into their portfolios.
In 2012, Business Insider’s Gus Lubin wrote that in Kahneman’s book “Thinking, Fast and Slow,” he writes that stock picking is an “illusion of skill.”
Kahneman earned his noble prize for his research that showed the lapses in human judgement when making economic decisions.
In his talk this week, Kahneman said that portfolio managers should try to have fewer ideas, make fewer changes in their portfolios, and have less trust in their confidence.
What’s more, Kahneman told the conference this week that women are better are not making the impulsive decisions that can derail portfolios, and added that women are, “quite possibly better at figuring out the client, and the emotional state of the client, and men ought to emulate women in those respects.”
On Wednesday, Business Insider’s Jonathan Marino noted that over the last year, S&P 500 companies with female CEOs have outperformed those led by men.
In his book, Kahneman made the distinction between “fast” spontaneous, emotional thinking, versus a slow, more calculative approach.