Investing Research Articles

…investors may be able to boost net returns by timing investments according to an index of leading economic indicators. However, success may depend critically on continually adapting the index to current economic conditions.

…investors should generally focus on the earnings estimates rather than the stock recommendations of equity analysts around the globe. Stock recommendations may offer incremental value (only) in countries with weak legal systems.

Capitalization-weighted stock indexes arguably incorporate a performance drag by overweighting overvalued stocks and underweighting undervalued stocks. In their February 2009 paper entitled “Fundamental Indexing: An Analysis of the Returns, Risks and Costs of Applying the Strategy”, Roel Houwer and Auke Plantinga examine the raw and risk-adjusted returns of hypothetical indexes of European stocks weighted by… Keep Reading

…German investor sentiment correctly anticipates equity market moves over the next few months to some degree. U.S. investor sentiment used to to be a contrarian indicator for equity market moves over coming months, but its predictive power has disappeared.

…evidence indicates that discount retail broker clients lose money on average to both non-discount retail broker clients and institutional investors, while non-discount brokerage clients have some success trading against institutions.

…investors may be able to exploit a stock price effect by focusing on the associated abnormally positive return during the first calendar quarter.

…adjusting asset class allocations according to key economic indicators may help investors manage risk and/or boost long-term returns.

…even though S&P 500 index timing rules based on fundamental indicators and investor sentiment indicators might significantly beat a buy-and-hold benchmark when evaluated in isolation, this outperformance generally evaporates after correcting for data snooping bias. In other words, luck is the dominant differentiator of rule performance.

…finance and economics professors on average currently estimate that investors require an annual excess return from equities in the range 5% to 7%.

Do individuals who use investment advisors achieve higher returns than those who do not? Two closely related papers entitled “Investment Advice and Individual Investor Portfolio Performance” of January 2009 by Marc Kramer and “The Impact of Financial Advisors on Individual Investor Portfolio Performance” of March 2012 by Marc Kramer and Robert Lensink address this question…. Keep Reading