Reader Barbara has nicely pointed out to me that the "hot hand" fund that I referenced in my prior post doesn’t look like it’s performing that well right now (see Yahoo). I’ve reproduced the chart here (click to enlarge).
As a note for casual readers of my blog, my prior post was trying to draw connections between current, real-world applications and discussions in James Surowiecki’s book, "The Wisdom of Crowds". My posts should not be interpreted to be investment advice.
How performance of the "hot hand fund" (not the actual name of the fund) will shake out is to still to be determined I suppose. Cumulative returns definitely look above average compared to the market returns.
As an additional note, I understand that another academic in finance was wondering whether the effect could be the momentum effect or a variation of the momentum effect observed in behavioral finance. Note: I am not sure if this academic saw the returns chart and timescale covered. Timescale is a pertinent dimension for observing some of the behavioral finance effects.
Steve Shu
Don’t forget to subscribe to Steve Shu’s blog now (click icon)!