Investing Research Articles

…evidence from simple tests does not support a belief that there is a systematic relationship between the annual rate of FDIC bank closings and assistance transactions and annual U.S. stock market returns.

…traders may have difficulty exploiting mispricing of stocks based on analyst disagreement about future earnings, because mispricing and trading friction rise and fall together. Small, nimble traders who carefully manage trading costs may have the best shot.

…retrospective analysis indicates that investors can identify growth stocks, but the long-term premium they pay for them is about twice that warranted by actual growth.

…very small numbers of extreme return days have a massive impact on long-term stock returns in emerging markets. The naive probability of predicting which days will be extreme is very low.

Are investors/traders irrationally attracted to stocks that have recently acted like winning lottery tickets? In their August 2008 paper entitled “Maxing Out: Stocks as Lotteries and the Cross-Section of Expected Returns”, Turan Bali, Nusret Cakici and Robert Whitelaw investigate the significance of extreme positive past daily returns for future returns. Specifically, they examine next-month returns… Keep Reading

…investors/traders may be able to enhance momentum trading strategies by focusing on stocks that fit most strongly into a growth or value style.

…this compilation of suggestions and questions can help investors/traders assess the credibility of returns claimed by advisory services.

…there is probably a substantial headwind for those speculating on stock pops by buying near-expiration, out-of-the-money call options. Selling such options may be reliably profitable.

…investors may be able to exploit a two-year reversion effect signaled by past returns of the broad value-weighted U.S. stock market.

…hedge fund investors are probably better off with maverick funds, perhaps new ones every couple of years, than with those cut from the herd.