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Investing Research Articles

3269 Research Articles

Classic Research: Separating Cash Flow and Discount Rate Contributions to Stock Returns

…separating stock returns into those driven by changes in cash flow and those driven by changes in the discount rate helps explain the size effect and the value premium.

Global Diversification: By Country or Industry?

…global integration is rapidly shifting the balance of diversification power from countries to industries (for investors who adhere to modern portfolio theory).

Earnings, Inflation and Stock Returns

…neither change in aggregate earnings nor the inflation rate alone is a good concurrent indicator for the overall stock market returns on a quarterly basis. However, because earnings growth and inflation are interrelated, they may together help forecast stock market behavior.

The Odds of Winning as an Active Trader

…this evidence suggests that the average day trader breaks even and that the most active traders may be the most successful.

Diversification for “Peak” Performance

…diversification produces “peak” performance by collapsing the probability of performance around the mean. With it, you will seldom fly high, or crash and burn.

Training for the Investor/Trader Hurdles

Investors and traders face three hurdles on the track to success…

Why Highly Volatile Stocks Tend to Underperform

…the idiosyncratic volatility premium is closely related to the value premium, with low volatility and high value stocks tending to outperform. Insensitivity to discount rate (inflation, interest rates) shocks is the common underlying factor.

Capturing the Value Premium by Avoiding Institutional Ownership

…capturing the value premium means focusing on stocks with the lowest institutional ownership.

Market-Leading Industries

…some industries (such as financial and retail positively, and petroleum and metals negatively) lead the overall stock market. However, the indications are not economically significant for traders.

Do What the Company Does?

…firms sell (buy back) company financial assets when their stocks are overvalued (undervalued), and analysts misinterpret or underreact to these actions. Investors should focus on the actions of corporate executives and not the forecasts of analysts.