What Investor Biases Are Open Investors Most Prone To?
Contributor Michael Pompian shares the results of his new study of personality traits and investment biases.
This is the 11th article in a series focusing on the Big Five personality traits and how they relate to behavioral biases of investors. Over the years, I have followed a debate between the effectiveness of the Myers-Briggs test versus another widely used personality test, the Big Five. More recently, the debate has intensified, and I decided to conduct a study of the Big Five. Specifically, I studied 121 investors, examining the relationship between the Big Five and investor biases. Why? Because taking the time to understand the underlying personality of the investor leads to better advice and results. This month's article examines openness.
This trait's primary characteristics are imagination, curiosity, and creativity. People who are high in openness tend to have a broad range of interests and skills. They are inquisitive about the world and other people and are eager to learn and experience new things. "Open" people tend to be adventurous and creative. People low in this trait are more traditional and may struggle with abstract thinking.