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Wednesday, November 05, 2008

Finance professors teach derivativatives, but for their own $...

Vanguard notes that finance professors may teach all about complex derivatives, but tend to be more conservative in their own personal finances.

A recent academic survey found that most U.S. college finance professors consider themselves "passive" investors—that is, they tend to favor mutual funds over individual securities and resist trying to outperform the market through frequent trading.

Finance professors "study financial markets, but they also invest in the markets," said Colby Wright, assistant professor at Central Michigan University, who conducted the study with James S. Doran, Ph.D., of Florida State University. "Considering how knowledgeable they should be on the subject—and considering they are entrusted to teach others how to invest—we thought it would be interesting to find out what they do with their own money."
A tilt toward mutual funds

Of the 642 academics who responded to the survey, 67% identified themselves as passive investors, with most investing primarily in mutual funds.

"I think finance professors tend to be more risk-averse than the typical investor," said Dr. Doran. ...

Their academic expertise notwithstanding, many respondents had never bought a futures contract, traded on margin, or purchased an exchange-traded fund. Likewise, a sizable minority had never traded an individual stock.


For some reason, this reminds me of my teenage years, listening to priests and nuns provide sex education.