The "snapshot in time" anomaly
There's a danger in relying on an arbitrary period end dates when it comes to financial investment reporting.
By Christopher Carosa | September 12, 2018 at 10:11 AM
As often happens with good regulations, the SEC's new requirement for calendar-end performance results came with unintended consequences. It codified the snapshot-in-time anomaly. (Photo: Shutterstock)
There's a demon that exists in all compliance-approved standardized reporting formats. It's terrible, and it can mislead both professionals and retail investors. It's a well-recognized behavioral fallacy that goes by the name of "recency." It's our awful human tendency to overweight the importance of what we've most recently seen. It's why, when asked to name the greatest actor, more folks say "George Clooney" or "Brad Pitt" than "Humphrey Bogart" or "Jimmy Cagney."
Christopher Carosa
Chris Carosa has been writing a weekly article and monthly column for BenefitsPRO online and BenefitsPRO Magazine since 2011 and is a nationally recognized award-winning writer, researcher and speaker. He's written seven books, including From Cradle to Retire: The Child IRA; Hey! What's My Number? – How to Increase the Odds You Will Retire in Comfort; A Pizza The Action: Everything I Ever Learned About Business I Learned By Working in a Pizza Stand at the Erie County Fair; and the widely acclaimed 401(k) Fiduciary Solutions. Carosa is also Chief Contributing Editor of the authoritative trade journal FiduciaryNews.com and publisher of the Mendon-Honeoye Falls-Lima Sentinel, a weekly community newspaper he founded in 1989. Currently serving as President of the National Society of Newspaper Columnists and with more than 1,000 articles published in various publications, he appears regularly in the national media. A "parallel" entrepreneur, he actively runs a handful of businesses, including a small boutique investment adviser, providing hands-on experience for his writing. A trained astrophysicist, he also holds an MBA and has been designated a Certified Trust and Financial Advisor. Share your thoughts and story ideas with him through Facebook (https://www.facebook.com/christophercarosa/)and Twitter (https://twitter.com/ChrisCarosa).
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