Our newest member Dr. Hamid Ahmadi was introduced by acting president Dick Bauer. He said that Hamid is a graduate of Claremont University with a Ph.D. in Finance. He has worked for many years as a professor at CSUS and has been a visiting scholar at Stanford University. He is published widely on Portfolio Management and Investment Strategy. Today, his topic is “Behavioral Finance and the Decision-Making Process”.
Hamid didn’t quite show us how to make a million dollars, but he did cause us to reflect and think about our decision-making process when it comes to money and other things. Hamid took training with E.F. Hutton – remember them? "When E.F. Hutton talks, people listen".
Hamid showed a picture of a person on a precipice and said this is how people feel before investing in the stock market; and showed a picture of a roller coaster and said this is how people feel after investing in the market.  Hamid said that our preference and choices are a function of a satisfaction function which shows that the first $10,000 that one earns bring great happiness, but the second $10,000 not quite as much. The same is true with the first beer versus the second or third beer. Hamid showed a graph of this phenomenon. He went on to show examples of how “framing” a question gets different answers. This is where both versions have the same identical facts. People will approve or disapprove depending on how these facts are framed. One example was about a decision to have surgery. The surgeons that were presented the success rate approved the procedure, and the surgeons that were presented the unsuccessful rate disapproved the procedure. The same identical facts draw different reaction depending on how one frames the questions.   Hamid said framing is often used in finance.  
Hamid showed that most decisions are subconscious, however, people make many decisions based on facts and assumptions. He showed two slides, one listed the “innate” biases and the other the “learned” biases and talked about each one. It was interesting to see the link between voting behavior and “likability bias” and the link between IBM giving away Microsoft and Intel and the “hindsight bias”.  He also showed how we treat money differently. We take a $10 discount on cheap items but won’t take the $10 discount on expensive ones. The reason, he said, is JND (Just Negligible Difference).   Hamid said the unintended consequences of these biases are our ability to manipulate ourselves and also become arrogant. He said the worst killer of intelligent decision making is arrogance.
Hamid speculated that perhaps investment advisers would better serve their clients by getting to know them more intimately, by spending more time with the client, with his or her family and getting a better feel for their aspirations.
E.F. Hutton is gone, but when Hamid talked, we all listened!!
President for the day, Dick Bauer, thanked Dr. Ahmadi for his most interesting presentation and noted that, in his honor, a book will be dedicated to the Carmichael Library.