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Larry Swedroe: The Influence Of Recent Market Returns On The Risk Tolerance Of Individual Investors
FYI: Last week, we examined a study that found investors’ risk tolerance fluctuates positively with recent market returns. This behavior is in direct conflict with rational economic theory, which dictates that when market returns become negative, wealth contracts and risk aversion should therefore decrease (while risk tolerance should increase). Regards, Ted http://mutualfunds.com/education/influence-of-recent-market-returns-on-risk-tolerance-part-two/
