Contrarians act against the market mood. “Buy when others are fearful, sell when they are greedy,” Warren Buffett has advised. The historical evidence for buying on the dips, however, is rather mixed.
Content: Article | Authors: Elroy Dimson, Mike Staunton, Paul Marsh | Source: The Economist | Subjects: Economics, Finance
No doubt many of you (myself included) will dutifully report to our students that the historical average return for large stocks is about 12% which corresponds to a risk premium of around 8%. (keeping math simple 😉 (see virtually any investment text for these numbers)) However, Dimson, Marsh, and Staunton report that this is probably an overly optimistic number. Not because the expected … [ Read more ]
Content: Article | Authors: Elroy Dimson, Mike Staunton, Paul Marsh | Sources: FinanceProfessor.com, Social Science Research Network (SSRN) | Subjects: Finance, Industry Specific | Industry: Investing