Forerunners of Behavioural Finance
Almost 20 years ago there were the classical economists – and there were us: the sometimes suspiciously eyed exotics who questioned homo oeconomicus and, with the combination of mathematics and psychology, examined the actual investment behaviour of investors. Today, we are proud to have been among the first to establish Behavioural Finance in the industry – even before the financial science approach made a career under this term.
Democratisation of investment know-how for private investors
the long term, a widely diversified investment is superior to any investment in a single instrument: the “diversified portfolio” forms the core of the modern portfolio theory, for which Harry Markowitz was awarded the Nobel Prize together with William F. Sharpe, eponym of the Sharpe Ratio. A lot of ideas used in our analytical functionalities, which provide the basis of our software modules, are derived from the scientific findings of Markowitz and modern portfolio theory. It has always been our goal to reassess the complex calculations of institutional investments and translate them visually so that even private investors can understand and use them for themselves.
Risk disposition metrics with Brengelmann
The scientific core of our risk profiling of investors is a study by Max Planck Institute scientist Johannes C. Brengelmann. As a leading behavioral therapist, he demonstrated that the risk behavior of people can only be understood via a multi-dimensional approach. In close cooperation with Prof. Brengelmann himself, we further developed the results of his basic research into an approach that can be used in day-to-day advisory processes to simply and sensibly record investors´ willingness to take risks. This is an established component of tetralog’s calculation kernels for risk profiling and ensures the reliable measurement of the individual risk appetite of investors.