Investing Research Articles

Investors and traders face three hurdles on the track to success…

…the idiosyncratic volatility premium is closely related to the value premium, with low volatility and high value stocks tending to outperform. Insensitivity to discount rate (inflation, interest rates) shocks is the common underlying factor.

…capturing the value premium means focusing on stocks with the lowest institutional ownership.

…some industries (such as financial and retail positively, and petroleum and metals negatively) lead the overall stock market. However, the indications are not economically significant for traders.

…firms sell (buy back) company financial assets when their stocks are overvalued (undervalued), and analysts misinterpret or underreact to these actions. Investors should focus on the actions of corporate executives and not the forecasts of analysts.

…investors can enhance returns by combining value and momentum styles, leaning toward momentum when the yield curve is normal and value when the yield curve is inverted.

…investors/traders who check investment performance frequently should make mental adjustments for pain-avoidance bias.

…investors should focus on return on investment as the driver of investment returns and earnings yield as the indicator of how large the returns should be.

…investors/traders generally underreact to the sentiment expressed by executives in company annual reports.

Our Guru Grades section ranks a group of 29 stock market experts according to our assessments of the accuracy of their stock market forecasts. Since Jack Schannep has been in the upper tier of the list since inception, we asked him to encapsulate his thinking on market timing as a guest entry for this blog…. Keep Reading