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Somehow the study of behavioral finance has always seemed a good fit with index investing. Indexers are focused on taking the emotion out of investing, carefully calculating a sound asset allocation plan and then sticking to it. So it seems natural that we would want to understand how we act and why. If we can understand our investing id, perhaps we can exist in our economic ego, and thereby graduate to our financially self-realized superego.
You may think it's a bunch of Psychology 101 nonsense, but Jason Zweig certainly thinks it's important. There's no one who is more of an "old school" indexer than Jason, and he has completely immersed himself in the science of behavioral finance in recent years. We're delighted to have both an interview and a book excerpt from Mr. Zweig in this issue. The writing has sizzle and substance, a rare combination these days.
Following the Zweig contributions, we've got one of our always-popular roundtables—this one focused on behavioral finance with an academic tilt. Sit back and enjoy the side-by-side responses of William Bernstein, David Blitzer, Francis Kinniry, Ed McRedmond, Ross Miller, Terrance Odean and John Prestbo as they debate just how nuts we are as investors.
Is it just me or is Craig Israelsen the ultimate fit for what we're doing in the Journal of Indexes? This issue, Professor Israelsen weighs in with another smart, practical and accessible analysis—this one on asset allocation and the efficient frontier.
From here we really enter the ETF world, first with an outstanding analysis of ETF spreads by our own Matt Hougan, a provocative and skeptical look at the potential of ETF investing on 401(k) platforms by David Blanchett and Gregory Kasten, and a look at the range of ETFs available from beta through alpha and their corresponding costs from Rick Ferri.
Bringing us home in the issue is David Blitzer discussing real estate, the current poster child of erratic investor behavior, and finally The Curmudgeon with a bit of a different take on behavioral finance.
Jim Wiandt
Editor
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