Investing Research Articles

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We evaluate here the the market commentary of Paul Tracy available via Zacks.com since October 2002. Paul Tracy, founder and Chief Investment Strategist of StreetAuthority, is one of Zacks’ “pros.” StreetAuthority describes itself as “a...

...synthetic hedge funds constructed statistically as mechanical trading strategies offer transparent, liquid, scalable, low-cost alternatives to actively managed hedge funds.

...over the last 80 years, a few price-normalized variables (price-dividend, price-earnings, price-output and price-consumption ratios) and the approximate consumption-aggregate wealth ratio have been the best stock market indicators.

...the difficulty of successful investing/trading probably makes many investors/traders underestimate their own knowledge/abilities and overestimate the knowledge/abilities of advisors.

...investors might want lean toward companies that contribute to lots of political candidates (especially Democratic candidates for the House of Representatives).

Are trades based on complex technical patterns, such as head-and-shoulders, rational speculations or noise? In other words, do such patterns reliably indicate opportunities to capture excess returns? In her July 1998 paper entitled “Identifying Noise...

...the overnight return on individual stocks is a contrary indicator for next-day returns, but individual "outside" traders may not be able to exploit this tendency.

...newsletters on average offer investors/traders average performance, without the broad diversification benefit of mutual funds.

...an exchange traded fund that focuses on value stocks with repurchase activity would be an attractive long-term investment vehicle.

Jack Schannep, editor of The DowTheory.com, has several times requested that we reconsider parts of our assessment of his specific stock market forecasts, as follows:

...the value premium and the size effect are real manifestations of emergent patterns of noise across large groups of stocks.

...investors/traders are generally willing to overpay for insurance and leverage via options, but only the market makers can consistently exploit this willingness.

...a market inefficiency with respect to volatility expectations for individual stocks may provide a means to beat the market by using options to trade volatility.

...investors/traders write (sell) more options than they purchase and deal much more in calls than in puts. Call writing is mostly hedging, while call purchasing and put writing are mostly speculations on stock prices.

...the persistence of success among some serial entrepreneurs demonstrates that success is not all luck. By similarity, investors/traders who persistently outperform their peers likely have skills in developing superior information about the market.

...it seems that hedge funds overall are not exhausting the supply of alpha offered by other players in worldwide equity markets.

...investors may want to examine a range of accounting indicators, not just earnings and earnings growth rate, to identify stocks likely to outperform over the long term.

...the author provides a comprehensive overview of equity risk premium concepts and values, stressing the mid-20th century break in key financial relationships.

...value investors are generally risk avoiders, and growth investors are typically risk seekers. Buying risk from one group and selling it to the other may be profitable.

...small-capitalization stock funds from other countries offer optimal diversification benefits for investors holding broad U.S. stock market indexes.

...when investors/traders are depressed, as measured by the gap between implied volatility and historical volatility, so are stock prices.

Do mutual fund investors move their money into and out of the stock market at the right times, or the wrong times? In their August 2006 paper entitled “Mutual Fund Flows and Investor Returns: An...

...the incorporation of folk medicine by pharmacology offers a model for bringing technical analysis into the financial economics fold.

...investing based on the principles of behavioral finance is indistinguishable from value investing, producing similar raw excess returns.