The shape of fudge

I enjoyed the story below from alpha architect's review of Ben Carlson's new book - A Wealth of Common Sense. 

"Ben highlights the importance of framing an investment decision in the context of an academic study where researchers ask students to eat a piece of fudge shaped like a piece of dog crap (pg. 52). If that doesn’t make you laugh, then you may be taking yourself too seriously.

Anyway, not surprisingly, students don’t want to eat fudge when it looks like a dog turd.

But why not?

Fudge should be considered a great thing if it actually is a great thing, no matter what the shape. However, that is not how the human mind works. In many respects, investing in value stocks, which are often framed as loser stocks with no redeeming qualities, is analogous to eating great-testing fudge that is in some distressing form (like a dog poop). Whereas, growth stocks are more akin to dog turds shaped as chocolate bars–yum!–everyone wants to take a bite!"

 

http://blog.alphaarchitect.com/2015/07/08/book-review-wealth-common-sense-ben-carlson/

 

 

Benjamin Graham's Defensive Investor Strategy - July 2015

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