Understanding human psychology is key to understanding financial markets, in particular for major events like the big tech market bubble and bust of the early 2000s. However, back then there were no tools to help Patrick Hussy and Manfred Hubner, two German fund managers and founders of behavioral finance research firm sentix, understand why investors behave the way they do.
"There was nothing at the time," Hussy said, "nothing in Europe anyway, that could help us get an objective measurement of investor sentiment at different points in time and in different markets."
The duo decided then to create their own tool to objectively measure investor behavior and understand it better in order to help themselves and other investors achieve better investment outcomes. The idea was simple, Hussy said; just a survey that asked investors—retail as well as institutional—the exact same questions every week.
Now, 15 years and 5,000 subscribers later, the sentix Global Investor Survey and Sentiment Database have become an important tool for European and U.S. asset managers to get a sense of investor sentiment vis-à-vis different markets and asset classes across the globe.
"Week by week, we are asking the same questions that basically ask investors what their expectations are for various equity markets in the short-, medium and long-term," Hussy said. "They choose that they're either bullish, bearish or neutral. That's it."
That information, though, has proven invaluable through the years.
At the end of each week, the sentix team aggregates the answers to the survey questions and publishes them on Sunday evening, "so that everyone who has taken part knows that he will be able to get the information back at the beginning of the next week," Hussy said.
From the weekly survey, sentix calculates about 400 different indicators that provide an exclusive insight into the decision processes of investors. The survey aims to offer a representative picture of the expectations, feelings and actions of investors in various financial markets. Matching up the principles of behavioral finance with the results of the weekly surveys provides valuable insights into investor psyche for major markets around the world that investors and financial advisors can use to their advantage, Hussy said.
