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Investing Research Articles

93 Research Articles

Stock Market Timing Using P/E SMA Signals

A subscriber proposed four alternative ways of timing the U.S. stock market based on simple moving averages (SMA) of the market price-earnings ratio (P/E), as follows: 5-Year Binary – hold stocks (cash) when P/E is below (above) its 5-year SMA. 10-Year Binary – hold stocks (cash) when P/E is below (above) its 10-year SMA. 15-Year Binary… Keep Reading

Robo Advisor Expected Performance and Acceptance

Does a flexible robo advisor (offering automated, passive investment strategies tailored to investor situation/preferences) perform well in comparison to mutual fund/stock portfolios they might replace? If so, what inhibits investors from switching to them? In their November 2016 paper entitled “Robo Advisers and Mutual Fund Stickiness”, Michael Reher and Celine Sun compare actual mutual fund/stock portfolios held… Keep Reading

Thaler on Investors

In his January 2018 retrospective “Richard Thaler and the Rise of Behavioral Economics”, Nicholas Barberis reviews the development of behavioral (less than fully rational) models of economics and finance, with focus on Richard Thaler’s contributions. This retrospective summarizes key models that make psychology-based assumptions about: individual preferences; individual beliefs; and, the process by which individuals make decisions. He further segments… Keep Reading

Capital Gains Tax Rate and Stock Market Returns

How might the capital gains tax rate affect stock market returns? First, a relatively low (high) rate might encourage (discourage) capital investment and stimulate (depress) economic growth, thereby persistently increasing (decreasing) corporate earnings and stock market returns. Second, an increase (decrease) in the rate might immediately drive lower (higher) portfolio allocations to stocks and thereby… Keep Reading

Weekly Summary of Research Findings: 1/11/21 – 1/15/21

Below is a weekly summary of our research findings for 1/11/21 through 1/15/21. These summaries give you a quick snapshot of our content the past week so that you can quickly decide what’s relevant to your investing needs. Subscribers: To receive these weekly digests via email, click here to sign up for our mailing list.

Weekly Summary of Research Findings: 5/10/21 – 5/14/21

Below is a weekly summary of our research findings for 5/10/21 through 5/14/21. These summaries give you a quick snapshot of our content the past week so that you can quickly decide what’s relevant to your investing needs. Subscribers: To receive these weekly digests via email, click here to sign up for our mailing list.

Investor Perception/Anticipation of Tail Events

How do individuals perceive and position for Black Swans? In his March 2013 paper entitled “The Psychology of Tail Events: Progress and Challenges”, Nicholas Barberis employs a two-step framework to summarize recent research on the psychology of tail events. He first addresses belief about the probability of a tail event. He then covers actions/decisions based on this belief,… Keep Reading

Individual Investor Performance by Motive and Method

…evidence from a limited test period suggests that conservative investing motives tend to outperform a speculative motive and that both news-augmented intuition and fundamental analysis tend to outperform technical analysis.

Two Biggest Mistakes of Long-term Investors

How can long-term investors maximize their edge of strategic patience? In their November 2011 paper entitled “Investing for the Long Run”, Andrew Ang and Knut Kjaer offer advice on successful long-term investing (such as by pension funds).  They define a long-term investor as one having no material short-term liabilities or liquidity demands. Using the California Public Employee’s Retirement System and other large institutions as examples,… Keep Reading

Demographic Headwind for U.S. Stock Market?

Will disinvestment of the baby boom generation retard U.S. equities? In their August 2011 letter entitled “Boomer Retirement: Headwinds for U.S. Equity Markets?”, flagged by a reader, Zheng Liu and Mark Spiegel revisit the relationship between U.S. age demographics and U.S. equity valuation as indicated by the lagged price-earnings ratio (P/E). They calculate P/E based… Keep Reading