Why lunch is so important

This week a new article from the Atlantic looked at how our moods shape our outlook and the choices we make. According to the article, researchers found that people on the website TripAdvisor gave restaurants consistently better reviews on sunny days and worse reviews on rainy days. In a different 2011 study covered in the Economist, researchers discovered that prisoners are more likely to be granted parole immediately after judges eat a meal, and that their chances of parole decline up until the judge’s next meal break. Doesn’t sound quite fair, does it?

Whether relying on honest feedback from everyday restaurant-goers or expert opinion that will literally change a life, humans are not rational decision makers. Medicine defined and solved this issue years ago when a landmark paper proved that rules-based decision-making outperformed the opinion of medical experts at least 85% of the time when diagnosing a group of patients. In other words, when making a decision, science trumps opinion.

Investing is no different. The eras of the Do-It-Yourself Investor and the Investment Guru are dwindling as study after study confirms humans do a subpar job estimating future returns. Through increased reliability, repeatability, and accuracy, rules-based methods such as the Growth and Income Portfolios are proving a greater probability of success.

So the next time someone’s telling you what they think the market’s going to do, check the weather then politely ask if they’ve had lunch yet.

Ben Kizemchuk is a Portfolio Manager & Investment Advisor with Altus Securities Inc. in Toronto. He offers financial planning and investment management for high net worth Canadian investors. Ben focuses on high quality investments, the Growth and Income Portfolios, low risk investing, and reducing tax.