Why Active Investment Management is Popular: The Psychology of Extraordinary Beliefs

Stephen Lofthouse
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Stephen Lofthouse: Freelance writer 4 North Several, London SE3 0QR, UK; tel/fax 0181 318 7132.

Journal of Interdisciplinary Economics, 1996, vol. 7, issue 1, 41-61

Abstract: If the stockmarket is efficient, and if few investors can beat the market, why are most portfolios managed actively (seeking mispriced assets) rather than passively (matching an index)? This article looks at three possible explanations, favouring an explanation in terms of cognitive psychology.

Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:sae:jinter:v:7:y:1996:i:1:p:41-61

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