These blog entries offer some big ideas of lasting value relevant for investing and trading.
May 26, 2005 - Big Ideas
In his March 2005 paper entitled “Reconciling Efficient Markets with Behavioral Finance: The Adaptive Markets Hypothesis”, Andrew Lo presents a framework for unifying the Efficient Markets Hypothesis (EMH) and Behavioral Finance. The paper is thoughtful and thought-provoking. Some key points are: Keep Reading
March 31, 2005 - Big Ideas
In The Anglosphere Challenge: Why the English-Speaking Nations Will Lead the Way in the Twenty-First Century, James Bennett implicitly advises focusing investments in certain countries. As depicted in the figure below, Mr. Bennett’s main thesis points are that: Keep Reading
March 16, 2005 - Big Ideas
In their February 2005 paper entitled “Portfolio Concentration and the Performance of Individual Investors,” Zoran Ivkovic, Clemens Sialm and Scott Weisbenner test the dictum for diversification by examining the stock trades of a large number of individuals during 1991-1996 through a discount broker. They find that: Keep Reading
February 4, 2005 - Big Ideas, Individual Investing
In his June 2004 paper on “What Are Stock Investors’ Actual Historical Returns”, Ilia Dichev examines stock market capital inflows and outflows to determine how well investors really perform compared to buy-and-hold returns. He concludes that: Keep Reading
February 1, 2005 - Big Ideas, Bonds, Currency Trading, Equity Premium
Triumph of the Optimists: 101 Years of Global Investment Returns by Dimson, Marsh and Staunton (2002) is thorough, logical and concise. With scores of illustrative graphs and figures, its statistics are accessible and its style straightforward. Its message, however, is somewhat at odds with the title. Below is a chapter-by-chapter review of the insights in this book: Keep Reading
November 3, 2004 - Big Ideas
Do stock index prices fluctuate around some value baseline? In his March 2001 paper entitled “Temporary Movements in Stock Prices”, Jonathan Lewellen investigates the degree to which stock market returns exhibit long-term reversion. Using data from the period 1926-1998, he concludes that: Keep Reading
October 23, 2004 - Big Ideas
In his April 2003 working paper entitled “The Efficient Market Hypothesis and Its Critics”, Burton Malkiel, author of A Random Walk Down Wall Street, contends that “a blindfolded chimpanzee throwing darts at the Wall Street Journal could select a portfolio that would do as well as the experts.” Has recent work of the behavioral finance community and the pattern-finders changed his mind? Keep Reading