Investing Research Articles

…actively managed mutual funds on average generate about half their value by picking the right industries rather than the right stocks. This big-picture skill, not company analysis, accounts for fund performance persistence.

…perceptions move markets. Market beliefs, which may express mistaken forecasts, are at least as important to asset pricing as macroeconomic fundamentals.

…mutual funds with relatively few holdings tend to underperform, refuting the view that focus on a few ideas supports good stock picking.

How do investors respond to the state of the U.S. federal fiscal deficit? In their August 2007 paper entitled “Fiscal Policy and Asset Markets: A Semiparametric Analysis”, Dennis Jansen, Qi Li, Zijun Wang and Jian Yang examine the relationships between U.S. fiscal policy and U.S. asset markets (stocks and bonds). Using monthly data for the… Keep Reading

…big up and down days appear to have some tendency to cluster, with such volatility clusters associated more with market bottoms than with continuing downtrends.

…a few outlier trading days have a massive impact on long-term stock returns, and attempting to forecast which days is a fool’s errand.

…stocks react to the surprise element in scheduled Federal Funds Rate announcements. There may be reliable trades in short-term continuation (reversal) of stocks after an initial spike down (up), especially for financial and information technology stocks.

…many eminent economists and political scientists believe that prediction markets could offer significant benefits to society and that government should remove barriers to their productive use.

…recent success (failure) leads to risk-taking (risk-avoidance) among mutual fund managers.

…firm accruals may be a good indicator of future stock returns when combined with a broader measure of firm financial health, or when defined as a fraction of earnings rather than assets.