Thanks, here’s the abstract / summary from the study:
We provide direct evidence on the effect of financial expertise on investment outcomes by analyzing private portfolios of mutual fund managers. We find no evidence that financial experts make better investment decisions than peers: they do not outperform, do not diversify their risks better, and do not exhibit lower behavioral biases. Managers do much better in stocks for which they have an information advantage over other investors, i.e., stocks that are also held by their mutual funds. More experienced managers seem to be aware of the limitations to their investment skills as they increase their holdings of mutual fund-related stocks following poor performance of their portfolios. Our results suggest that there are limits to the value added by financial expertise.
I think the point here is that it’s the behaviour that can have a far bigger impact on the success of an investor than their knowledge.
There’s obviously a risk that as you acquire more knowledge, you think you have an edge & end up making bad decisions.
But if you can keep that under control (like, to use an extreme example, Buffet) then there’s clearly benefits to having knowledge when you invest. I wouldn’t recommend simply guessing as a stock picking strategy.
In case anyone’s interested, we’ve talked about this subject some more here -