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German to English: THE BEHAVIOUR OF INVESTORS IN THE CAPITAL MARKETS General field: Bus/Financial Detailed field: Economics
Source text - German 1. Kompetenzillusion
Das Gehirn filtert und vereinfacht, um der grossen Menge und Komplexität der Informationen Herr zu werden. So entstehen vereinfachte Annahmen und Schätzungen, die zu einer Reihe von Fehlverhalten führen können, zum Beispiel zu jener der Selbstüberschätzung. Prof. Kahneman spricht im Zusammenhang mit Kapitalanlagen auch davon, dass eine ganze Branche - also jene der Finanzindustrie - auf einer Kompetenzillusion (sogenannte „illusion of skills“) zu basieren scheint. Die empirische Datenmenge nach über fünfzigjähriger Forschung zu diesem Thema ist, entgegen dem Glauben der meisten Teilnehmer am Markt, eindeutig: bei der grossen Mehrheit der Anleger gleicht die Auswahl von Einzeltiteln eher einem Würfelspiel. Dies kann man an den jährlichen Ergebnissen (Performance) ablesen. Würde die Kompetenz der Anleger eine Rolle spielen, wären die Rankings von Jahr zu Jahr stabiler. In Wahrheit ist die Korrelation zwischen aufeinander- folgenden jährlichen Anlageergebnissen von Investmentfonds in der Regel äusserst klein, kaum grösser als null. Daher besteht unter Forschern Einigkeit darüber, dass fast alle Anleger (inklusive der Mehrheit professioneller Investoren), ob sie es wissen oder nicht - und nur wenige wissen es - ein Zufallsspiel spielen. Wertpapierhändler haben subjektiv das Gefühl, in einer Situation grosser Unsicherheit rationale, wohlbegründete Vermutungen anzustellen. In hochkomplexen Märkten aber sind auch fundierte Vermutungen nicht treffgenauer als blinde Vermutungen.
Auch sogenannte Experten unterliegen damit der Kompetenzillusion. Es fällt auch ihnen schwer, die Grenzen ihrer Vorhersagefähigkeit anzuerkennen, weil der Mensch dazu neigt, kohärente Erzählungen über vergangene Ereignisse zu konstruieren und daran zu glauben. Im Rückblick ergibt alles einen Sinn (vergleiche was alles nach 2009 über die Ursachen der Finanzkrise geschrieben wurde), eine Tatsache, die Finanzexperten jeden Tag ausnutzen, wenn sie über- zeugende Erklärungen für die Ereignisse des Tages liefern (zum Beispiel die Kommentatoren bei Finanznachrichten Kanäle wie Bloomberg, CNBC, n-tv, etc.).
Die Illusion, wir verstünden die Vergangenheit, fördert die Überschätzung unserer Fähigkeit die Zukunft vorherzusagen. Der Psychologe Philip Tetlock (Universität Pennsylvania), der im 2005 veröffentlichten Buch „Expert Political Judgement: How Good Is It?“ seine Studienergebnisse zusammenfasste (er trug 80'000 Vorhersagen über einen Zeitraum von 10 Jahren zusammen an- hand von Befragungen von 284 Personen, die ihren Lebensunterhalt als Berater, Kommentatoren für ökonomische und politische Trends verdienen), kam ebenfalls zum Schluss, dass „diejenigen, die mehr wissen, nur geringfügig bessere Vorhersagen liefern, als diejenigen, die weniger wissen“. Selbst auf dem Gebiet, das sie am besten kannten, waren die Experten nicht deutlich besser als Nichtexperten.
Translation - English 1. Illusion of competency
The brain filters and simplifies so as to master the large volume and complexity of information. This results in simplified assumptions and assessments, which can lead to a series of erroneous behaviours, for example that of self-overestimation. Prof. Kahnemann mentions, in the context of capital investments, that an entire sector — i.e. the financial industry — appears to be based on an illusion of competency (the so-called “illusion of skills”). The empirical volume of data after more than fifty years of research, contrary to the belief of most participants in the market, is unambiguous: for the vast majority of investors, the selection of individual titles resembles nothing more than a roll of the dice. This can be seen in the annual results (performance). If the competency of the investors played a role, the rankings would be more stable from year to year. But in reality, the correlation between successive annual investment results of investment funds typically is very small, hardly larger than zero. That is the reason that there is agreement among researchers that almost all investors (including the majority of professional investors) are playing a game of chance, whether they know it or not — and very few know it. Traders of commercial papers subjectively have the feeling they make rational, well-reasoned assumptions in situations of great insecurity. But well-founded assumptions are no more on target than blind assumptions in highly complex markets.
This means that even so-called experts are subject to the illusion of competency. They too have a hard time recognizing the limits of their powers of prediction, because humans tend to construct coherent narratives about past events, and to believe in them. Everything makes sense in hindsight (just think about everything that was written about the causes of the financial crisis after 2009), a fact financial experts exploit every day, when they deliver convincing explanations for the events of the day (for example, the commentators on financial news channels such as Bloomberg, CNBC, n-tv, etc.).
The illusion of understanding the past supports the overestimation of our abilities to predict the future. The psychologist Philip Tetlock (University of Pennsylvania), who summarized his research results in the book “Expert Political Judgement: How Good Is It?,” which was published in 2005 (he collected 80,000 predictions over a period of 10 years, using interviews with 284 individuals, who earn their living as advisors or commentators for economic and political trends), also came to the conclusion that, “those who know more deliver only marginally better predictions than those who know less.” The experts were not significantly better than the non-experts even in the fields with which they were most familiar.
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Bachelor's degree - Portland State University
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Years of experience: 15. Registered at ProZ.com: May 2014.
I was born in Germany, but spent some of my childhood and all of my adult life in the United States.
My secondary schooling took place in Germany and the US. I was trained as an electronics technician in Germany, but then moved to the US permanently in my early 20s and went to university there.
This life experience has made me completely bilingual, not only in my vocabulary, but culturally and intellectually as well.
I've used English as my primary language for so long that it functions as my native tongue at this point. I'm a published writer and journalist (in English).
I worked as a sound engineer for many, many years, before turning to journalism and translation. My technical background helps me understand engineering and scientific source material. It also imbued me with a methodical, thorough work ethic.
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