Investing Research Articles

As suggested by a reader, we evaluate here stock market forecasts of John Buckingham, Chief Investment Officer of Al Frank Asset Management, who emphasizes careful stock selection, broad diversification and a long investing horizon. He is editor of the Prudent Speculator and author of The Buckingham Report (as much promotional as informative). The few forecasts… Keep Reading

…evidence suggests that investors may be able to predict which SEOs will engender the most pronounced subsequent market underperformance by measuring the level of surprise in the SEO announcement.

Reasons why it is likely unproductive to attempt to rank firm characteristics or factors according to predictive power for future stock returns, or strategies according to modeled alpha, include…

…investors may be able to generate substantial average abnormal returns by systematically taking short (long) positions in stocks of firms with extremely bad (good) quarterly earnings for several months after respective earnings announcements.

…empirical analysis indicates that ignoring hedge fund withdrawal restrictions may result in material overestimation of the benefits of including hedge funds in a portfolio.

…evidence from narrow portfolios (top 30 stocks) over a recent short test period indicate that GARP-value-size strategies perform well, with the magic formula (EBIT/EV and ROC combined), EBIT/EV alone and E/P alone excelling.

“…many investors have been lured into the idea that shorting a pair of leveraged ETFs is a sure gain.”

…evidence indicates that option collars may substantially improve the performance of ETFs and mutual funds over fairly long periods that include bear markets.

The author therefore employs a strategy that agrees with your hypothesis.

…this logic assumes that the options market maker (or other options trade counterparty) is ignoring or underestimating the impact of the grind when pricing the options.