Bailard, Biehl And Kaiser Five-Way Model

  

What a provocative title, to say the least. One's mind leaps to the lewd and rambunctious. Like a ‘60s Fishbowl Party.

But BBKFW is a financial term. We usually think of investors as comprising either winners or losers, occasionally tossing the adjective "big" onto the loser term. Bailard, Biehl and Kaiser felt the need to build upon that brief description. They came up with a five-way model as a way to categorize investors (the Meyers-Briggs of investors?):

Individualists - Confident and careful do-it-yourselfers.

Adventurers - Big risk takers, all in on one investment, no diversification.

Celebrities - Trend followers with no expertise or opinion, approach investment managers frequently.

Guardians - Lack confidence in themselves and the markets, emphasis on safety of the capital, lean toward government securities and guaranteed return investments.

Straight arrows - split personalities, exhibit extreme carefulness and impetuousness.

Related or Semi-related Video

Finance: What is the Securities Act of 1...60 Views

00:00

Finance a la Shmoop! What is the Securities Act of 1933? Hey, is it these

00:08

axes? No, it's a different act, or a whole bunch of Acts in the 30s and the

00:12

40s. All right, well for a long time the

00:14

little guy had, well not really much more than a prayer, when it came to investing [man praying in church]

00:19

his money. Like investing it well. The stock market appeared to be this wild,

00:23

wild, Westy thing, with few rules and a whole lot of insider trading information,

00:28

driving the bus, or carriage, or whatever they had back then. In fact before 1933,

00:34

securities laws were a, state thing. Each state had its own view as to how much

00:40

the poor uneducated farmer should be protected by the government. In fact

00:45

most really weren't protected at all. Making matters even worse, States [man and woman trading on map]

00:50

citizens, invested in each other all the time. Like across the state border. So

00:56

what would then happen when one set of state's laws, applied to one side of the

01:00

trade and one state set of laws, was conjoined to another set of laws, applied

01:05

to the other in a different state. Yeah that was a problem. Clearly we needed,

01:10

national laws and that's when the 1933 Securities Act was born, setting federal

01:16

law above state law. But keeping state laws generally intact when the [Uncle Sam]

01:21

intrastate activities were happening. What did all that mean? Well it

01:24

meant that the default laws generally revolved around whatever the state had

01:29

already in place. Except in the case where transactions, required a federal

01:34

purview, or look-see. Because the transactions happened among, two or more

01:39

states, or that they violated some major federal law. Like discrimination or

01:44

something like that down the line. Well the notion here, was that, farmers were

01:49

being sold acres of, quote, Blue Sky, unquote. Like you had to pay for the blue [two men in field]

01:54

sky and we're not talking about smog here. Instead of things of real value.

01:58

Right, like farmers would believe that they could buy an acre of blue sky.

02:02

Sorry, farmer Joe, we're just keeping it real there, you really did try to buy

02:06

acres of blue sky. Was solely because, farmer Joe, did not possess the education, [squirrels in head]

02:11

to determine the difference between a real investment opportunity and a fake

02:16

one. Finally the government, well they just had to step in and protect the

02:20

average Joe, from the average, you know Schmo.[man talking in front of parchment]

Up Next

Finance: What is fund diversification, and why is it important?
45 Views

What is fund diversification and why is it important? Fund diversification means investing in different financial products and sectors. It’s real...

Finance: What is the 1934 Securities And Exchange Act?
14 Views

What is the 1934 Securities Exchange Act? The 1934 Securities Exchange Act brought about the SEC, or the Securities Exchange Commission. This act,...

Finance: What is Capital Gains Distribution?
21 Views

What is Capital Gains Distribution? Owners of equity based mutual funds which are successful in investing will inevitably be the recipients of thei...

Finance: What is Capital Gains Tax?
7 Views

What is Capital Gains Tax? Capital gain taxes are taxes collected by the IRS on trading profits from investments in equities, real estate, or any o...

Find other enlightening terms in Shmoop Finance Genius Bar(f)