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TMFHelical (98.70)

Martha - You Just Don't Fit In

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March 26, 2008 – Comments (6)

Though few remember her tagline on Martha Stewart's apprentice wannabe show, they certainly do remember her legal imbroglio over her Imclone stock sale. It ended her in jail. [Imclone being the thin tie-in for this biotech oriented blog].

But how good an investor was Martha -- even with her high priced (and well-informed) assistance.  Well, it turns out her portfolio was divulged at the trail, and has been written about.  I hadn't seen it before.  I'd tell you 'It's a Good Thing' - but it sure ain't (is there an apostrophe in ain't?).

Here is a summation and commentary by Meir Statman - a well known researcher into behavioral investing.

Marta Stewart's Lessons in Behavioral Finance - Journal of Investment Consulting, Winter 2005 [Linked via his faculty website, lots of good stuff there]

Turns out that Martha does in fact fit in - if fitting in means suffering the foibles and misjudgements of a typical investor - but she is so clearly not a Fool.

Anyway this is an interesting read (cut her some slack - not many portfolios looked good in December 2001) and may well contain some behavior you see reflected in your own portfolio management.

Zz 

6 Comments – Post Your Own

#1) On March 26, 2008 at 11:18 PM, FleaBagger (29.37) wrote:

She was innocent.

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#2) On March 27, 2008 at 11:20 AM, devoish (99.07) wrote:

Nice post Zz, I definitely see some of my own biases in there.

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#3) On March 27, 2008 at 4:17 PM, mindmuse (90.96) wrote:

Not a lot of diversification in that portfolio either. I was working in the tech fields then and was overweight in areas I knew a lot about (like Exodus, for crying out loud) - a potential area of other cognitive biases. But jeez, Martha looks like she never met a tech stock she didn't like, and had few stocks in other sectors.

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#4) On March 28, 2008 at 3:42 PM, TDRH (99.76) wrote:

I share her pain with PFE -stuck in a value trap.

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#5) On April 05, 2008 at 12:25 PM, Tastylunch (29.54) wrote:

wow that was an awesome link. Really explains why she did what she did with imclone. her track record really stunk no wonder she wanted to protect her profts.

heh makes me feel better I only lost about 3% of my portofolio in 2000 (becasue I forgot to sell a mutual fund while I was in school). But yeah emotional attachment is still my biggest pitfall like a lot of people  but I've gotten a lot better at controlling it. 

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#6) On April 06, 2008 at 11:32 AM, GeordieMc (44.84) wrote:

I support your apostrophe in "ain't" (contraction of "am not", "are not" or "is not")

Good little article!

 --Geordie 

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