The Most Empirical Hedge Fund

Here’s an idea for a hedge fund. First, you go out and hire some financial journalists. Next, you go out and hire a whole bunch of people with various degrees of financial training from various roles within the finance industry (research analysts, traders, portfolio managers, etc.). And last, you hire about twenty behavioral psychologists. Then, the finance people sit down and read all the news they can on companies. The psychologists analyze how they react to the stories and their general sentiment. The financial journalists then write stories showing different possible future developments and the finance people read those while the psychologists measure their reaction and mood. One can then estimate how much risk there is versus reward in the scenarios coming to fruition and trade based on that. Also, if some of the fictitious scenarios come true, or come close, you’ll have some data on how things should play out. Obviously you’ll need a lot for the proof-of-concept to be verifiable and get investors, but it’s simple enough–instead of trying to figure out why people react certain ways you’ll be saying how they react.

As for the name of the fund? How about “Couch Capital” or “How-I-feel-isn’t-important-it’s-how-you-feel-that-matters Global Opportunity Fund”?

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