In the Friday edition of the Wall Street Journal Fund Track column, Matthias Rieker features Christopher Blum, chief investment officer of the U.S. behavioral-finance group at J.P. Morgan Funds and manager of the $320 million JPMorgan Intrepid Value Fund.

Blum believes that neither markets nor investors are rational and thus stocks are often undervalued and avoided because their behavior is 'irrational' or investors lack a discerning eye for short-term gains.

“When it comes to risk, that irrational tendency becomes exaggerated,” Blum states.

What companies are at the top of his wish-list? Blum favors Capital One Financial and Goldman Sachs Group, while Theodore Dimig, J.P. Morgan Funds client portfolio manager, is intrigued by Macy's.

Blum ought to know. His Intrepid Value Fund, which is up 22.4 percent this year and down 7.6 percent over the past three years, has seen flat assets all year.

“To us, that's behavioral finance at its best: People got burned on equities and they shun risk at exactly the wrong time,” Blum tells the WSJ. When the sentiment changes, “chances are, we may be bearish.”

Blum offers a merry outlook for the economy as well, determining that leading economic indicators point to brighter skies ahead. The only caveat to this festive sentiment is of course, unemployment, which historically is a lagging indicator. 

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