Manager Discussing His Ideas With Others

Subject: Finance
Pages: 2
Words: 368
Reading time:
2 min

The answer to this question seems obvious: yes. Indeed, when a manager developed a unique investment strategy, she could follow her path, which could well lead to success, even contrary to the general trends. Nevertheless, the manager decided to discuss her ideas with colleagues, which will undoubtedly affect market dynamics. First of all, it should be noted that there is nothing negative about the fact that the pension fund manager decides to consider the strategy with other professionals. Being in doubt, she needed highly qualified help, and consequently, she decided to use her connections to assess the effectiveness of the contrarian strategy. However, she gave them this idea, and now they can use the same strategy for investment. As a result, a market previously teeming with “traditional” investors will be filled with opposition ideas, and an exchange stock crisis may eventually occur.

Moreover, it is evident that by raising demand for contrasting investments, it will create a herd effect. It is necessary to take into account the fact that the woman can have a sufficient level of trust and authority to inspire other market participants with her own right views. The fact that a pension fund manager has decided to share a financial strategy with colleagues may result in them choosing the same investment path. It should be recognized that this effect can be achieved either because of the incompetence of the managers of other funds or because of the strong influence of women on the circle of colleagues. Either way, the situation turns out to be threatening as more investors decide to use the contrarian idea to invest: like a herd. A specific mechanism is that investors have already received an external signal (from the woman) and, without thinking about it, have invested money according to a given strategy. This is especially true if entrepreneurs are severely limited in time to make a financial decision. Eventually, the bubble of such investors will start to expand and may burst if the market does not reach the balance. On the contrary, an ideal scenario would be the conditions under which colleagues of a manager would thoroughly test her strategy before using it.