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Investing Research Articles

3185 Research Articles

50-Year Fed Model Meme?

…the Fed Model has worked pretty well starting about 1960, with interest rates since playing a key role in stock valuation.

One Up on the Fed Model?

In their June 2003 paper entitled “A General Theory of Stock Market Valuation and Return”, Christophe Faugere and Julian Van Erlach contend that past stock returns are overstated and develop a market valuation formula that out-fits the Fed Model. Specifically, they show that:

Earnings Yield-Interest Rate Spread

…the gap between the S&P 500 earnings yield and Treasury instrument yields has some market timing value, with short spreads outperforming long spreads.

Reversion to Something

…stock market returns fluctuate away from, and revert to, a running mean on a roughly annual basis.

Are Short Sellers Smarter Than the Average Bear?

…investors should avoid stocks with high short interest ratios.

Implicit Coordination of Individual Investors?

…individual investors systematically show attention-driven herd-like behaviors.

The Lure of Trading?

…a high level of trading activity usually underperforms.

Does Investor Sentiment Give Trading Signals?

…just because there is a crowd of traders does not mean there is wisdom.

Randomly Walking in Circles?

…Burton Malkiel continues to believe that the stock market is inexploitably efficient.

Do Day Traders Make Money?

…day trading is risky business. Practice and speed appear to be critical success factors.