It's no secret that the young are especially susceptible to following the latest trends, but it's apparently true in the investing world as well.
Using mutual fund data from Morningstar, academics Robin Greenwood and Stefan Nagel found that during the run-up to the Internet bubble in 2000, younger managers were more inclined to load up on technology stocks, chasing trends in a classic sign of inexperience.
From the study (via the Financial Times's Alphaville):
Using age as a proxy for managers' investment experience, we find that around the peak of the technology bubble, mutual funds run by younger managers are more heavily invested in technology stocks, relative to their style benchmarks, than their older colleagues. Furthermore, young managers, but not old managers, exhibit trend-chasing behavior in their technology stock investments. As a result, young managers increase their technology holdings during the run-up, and decrease them during the downturn. Both results are in line with the behavior of inexperienced investors in experimental asset markets.
So, never trust anybody under 35 (Greenwood's and Nagel's benchmark) with your money?
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