Investing Research Articles

…front-running the predictable effects of unusual mutual fund inflows and outflows on stocks held in common offers significant excess returns.

…situations involving herded traders and/or a small number of shareholders are good candidates for producing mispriced stocks.

…expertise does not mitigate bias. Even highly experienced investors/traders should consider measuring their estimation errors for related tasks to calibrate their judgments.

…portfolio changes after achieving the Morningstar 5-star rating hurt fund performance, and investors should be cautious about using this rating as the principal means of selecting mutual funds. Handling large cash inflows attracted by the high rating may be the culprit.

If your crystal ball has not been working so well…

…analyst stock price targets are not good predictors of actual stock price potentials. Analysts exhibit this poor performance because they want to express optimism about the stocks they cover and have no compensation incentives or public accountability related to stock price targets.

…short sellers throw in the towel (throw more punches) when stock prices move against (with) their positions.

…given that trading involves logical reasoning, numerical computation and long-term planning, one component of successful trading may be a reduced level of emotional reactivity.

…stocks have significantly outperformed less risky asset classes in the U.S. for over 200 years. Volatility comes with the outperformance.

…smart young (hedge fund) drivers wanted.