Investing Research Articles

…reasonably isolated attention-grabbing events are opportunities for profitable day trading.

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:

In the February 2005 issue of The Financial Review, Burton Malkiel offers “Reflections on the Efficient Market Hypothesis: 30 Years Later” as a pudding-based proof of his famous proposition. He pits the performance of professional investment managers against that of market indices and finds that:

…21st-century investors should curb their exuberance.

…short selling is more effective at buffering exuberance for individual stocks than for the overall market.

…mutual fund inflows naively chase past returns.

…the media constitute a possibly destabilizing element, since they support the continuation and reinforcement of states of disequilibrium, or maybe even trigger them.

…investor emotions drive market volatility, but there is an asymmetry to fear and greed.

…individual investors should be wary of investing in stocks that are the top mutual fund holdings.

…portfolios built using aggregate analyst recommendations may produce gross outperformance, but transaction costs absorb excess returns. Moreover, privileged investors get the jump on analyst-driven trades.