When your hedge fund manager buys a Ferrari, find a new manager

(Dec 14): Maybe David Einhorn was on to something when he bought his Honda Odyssey.

It turns out that the car your hedge fund manager drives says something about his capacity for risk taking -- and his ability to generate market-beating returns. Minivan owners in particular run funds that tend to take on far less risk and exhibit lower volatility than sports-car driving managers, according to a new study by academics Yan Lu, Sugata Ray and Melvyn Teo.

The researchers say car ownership can be a good gauge of a trait they call “sensation seeking,” which has been linked to substance abuse and crime -- not the most comforting behavior when it comes to money management. They found that the increased proclivity for risk taking comes “without being compensated for higher returns.”

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