At Huygens Capital, we rely on a rigorous, fact-based investment system built on statistical analysis of decades of empirical equity market history.
Behavioral finance research suggests that investors often make decisions based on what happened most recently. This “recency bias” can lead to timing mistakes: increasing equity exposure near market tops, and decreasing exposure near market bottoms.
In addition, behavioral finance tells us that investors’ fear of loss in uncertain investment situations overpowers their anticipation of possible gain. This “loss aversion” often leads investors to miss out on potential successful investments.
To avoid these human biases and the errors that accompany them, we prefer to remove human emotion from the equation entirely.