Investing Research Articles

…investors overpay for volatile stocks over the long haul, most dramatically during bear markets.

Does the head-and-shoulders stock price pattern embody investor attitudes that traders can exploit to earn abnormal returns? Or, does it represent an opportunity for the statistics-challenged to be fooled by randomness? In their October 2006 paper entitled “The Predictive Power of ‘Head-and-Shoulders’ Price Patterns in the U.S. Stock Market”, Gene Savin, Paul Weller and Janis… Keep Reading

…neither bullish nor bearish candlestick signals reliably generate abnormal returns in the expected direction for large-capitalization U.S. stocks during recent years.

…finance professors are mostly passive investors, but even those trying to beat the market clearly prefer popular investing indicators over formal (“academic”) valuation and asset pricing models.

…investors have expected a fairly stable value premium of about 6% per year over the past 60 years, derived mostly from growth in dividends.

…there is considerable redundancy and invalidity among the many factors used to explain differences in returns among individual stocks. Three factors may be necessary and sufficient, with liquidity the most influential.

…investors systematically overvalue (undervalue) stocks when they expect earnings per share to be low (high). Their expectations exhibit conservatism bias with respect to both the downside and upside extremes.

…status may be more powerful than wealth as a motivator, with significant implications for investor/trader behavior.

…earnings acceleration helps explain stock returns, most notably when it amplifies the direction of earnings growth (both positive or both negative).

…there is a tendency for stocks worldwide to reprise their monthly return behavior every 12 months, with intracycle reversals, over periods of many years. Results suggest calendar-connected market structures.