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Investing Research Articles

3584 Research Articles

One Up on the Fed Model?

In their June 2003 paper entitled “A General Theory of Stock Market Valuation and Return”, Christophe Faugere and Julian Van Erlach contend that past stock returns are overstated and develop a market valuation formula that out-fits the Fed Model. Specifically, they show that:

Earnings Yield-Interest Rate Spread

…the gap between the S&P 500 earnings yield and Treasury instrument yields has some market timing value, with short spreads outperforming long spreads.

Reversion to Something

…stock market returns fluctuate away from, and revert to, a running mean on a roughly annual basis.

Are Short Sellers Smarter Than the Average Bear?

…investors should avoid stocks with high short interest ratios.

Implicit Coordination of Individual Investors?

…individual investors systematically show attention-driven herd-like behaviors.

The Lure of Trading?

…a high level of trading activity usually underperforms.

Does Investor Sentiment Give Trading Signals?

…just because there is a crowd of traders does not mean there is wisdom.

Randomly Walking in Circles?

…Burton Malkiel continues to believe that the stock market is inexploitably efficient.

Do Day Traders Make Money?

Could we make a bundle day trading? In their May 2004 paper entitled “Do Individual Day Traders Make Money? Evidence from Taiwan”, Brad Barber, Yi-Tsung Lee, Yu-Jane Liu and Terrance Odean assess the success of day traders in the Taiwan stock market. Using detailed individual trading records, they find that:

Does Consumer Confidence Predict Stock Market Returns?

…consumer confidence is not a worthwhile indicator for stock market investors and traders.