Pick the fund manager with the widest grin

According to recent research, the happier people are, the better they predict the future. So perhaps, says Matthew Lynn, investors should forget fund performance charts, and ask if the managers are feeling good about themselves.

What makes a successful trader or fund manager? An all-encompassing view of how the global economy is developing? An instinct for a bargain? A fleetness of foot and the confidence to take bold positions? A willingness to ignore the herd and buy the stuff everyone else is selling? Or the patience and perseverance of a tortoise? There are many great traders and investors who have made fortunes through one or other of these qualities. But actually, the answer may be a lot simpler than any of these.

According to research released this month by the French business school Insead, the happier people are, the better they are at predicting the future and the more depressed they are, the worse they are at it. It has long been noted that more cheerful people tend to have a more optimistic view of the future, while the more miserable, not very surprisingly, are usually more pessimistic. In the markets, the optimists are usually bulls, while the pessimists are bears.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.