An investigation shows that investors suffer when firms stop giving quarterly earnings guidance.
Content: Article | Authors: Baruch Lev, Jennifer Tucker, Joel F. Houston | Source: STERNbusiness (NYU) | Subjects: Finance, Market/Investment | Industries: Finance / Banking, Investing
Socially responsible investing is neither as profitable nor as responsible as advertised. But if you insist, here’s how to do it right.
Content: Article | Author: Henry Blodget | Source: The Atlantic Monthly | Subjects: Finance, Social Responsibility | Industry: Investing
Do hedge funds improve management of the companies they invest in? A new study by Harvard Business School professor Robin Greenwood and coauthor Michael Schor argues that, in fact, hedge funds create shareholder value through anticipation of change, not necessarily delivering it.
Content: Article | Author: Robin Greenwood | Source: Harvard Business School (HBS) Working Knowledge | Subject: Finance | Industry: Investing
Despite their cost, speculative bubbles may have an enormous upside, a new book argues.
Content: Article | Author: Edward Teach | Source: CFO Publishing | Subject: Economics | Industry: Investing
A fundamental economic question is the tradeoff between investment and consumption and how it determines asset prices in the macroeconomy. New research studies the relationship between consumption and asset prices using microeconomic data.
Content: Article | Authors: Annette Vissing-Jørgensen, Christopher J. Malloy, Tobias J. Moskowitz | Source: Capital Ideas | Subjects: Economics, Finance | Industry: Investing
Total Returns to Shareholders (TRS or TSR) doesn’t reflect a company’s performance or health. What does?
Content: Article | Authors: Richard Dobbs, Tim Koller | Source: McKinsey Quarterly | Subject: Finance | Industry: Investing
Interest is rising in the Treynor-Black model for portfolio selection, which can provide a new application to enterprise-wide portfolio optimisation, says Ross Miller.
Content: Article | Author: Ross Miller | Source: Risk Magazine | Subject: Finance | Industry: Investing
Modern portfolio theory is the philosophical opposite of traditional stock picking. It is the creation of economists, who try to understand the market as a whole, rather than business analysts, who look for what makes each investment opportunity unique. Investments are described statistically, in terms of their expected long-term return rate and their expected short-term volatility. The volatility is equated with “risk”, measuring how much … [ Read more ]
Content: Article | Source: moneychimp | Subject: Finance | Industry: Investing
Conventional wisdom dictates that businesses invest in their best performing units, and sell, shutter, or siphon off resources from their worst performers. But what if the conventional thinking is wrong? Leading behavioral economists now believe that investing in your “dogs,” or poor performing units, could bring far better returns than investing in your “stars,” or best performing units. It’s a counterintuitive strategy that could lead … [ Read more ]
Content: Article | Authors: Harry Quarls, Kasturi Rangan, Thomas Pernsteiner | Source: strategy+business | Subjects: Finance, Strategy | Industry: Investing
Jay Ritter finds that shareholder returns are negatively correlated with economic growth.
Content: Article | Author: James Mahar Jr. | Source: FinanceProfessor.com | Subject: Finance | Industry: Investing
This article describes the concept of hedge funds/alternative investments, many of the different strategies they employ, and their relationship to Modern Portfolio Theory.
Content: Article | Author: Darrol J. Stanley | Source: Graziadio Business Report | Subjects: Finance, Industry Specific | Industry: Investing
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
The SEC’s Regulation FD, which required companies to share all important data with all investors – rather than with analysts – has proved controversial. Critics said it would impair analysts’ ability to forecast earnings and create havoc in the markets. Supporters argued that it would merely level the informational playing field. Who was right? One of the first efforts to measure the quantitative effects of … [ Read more ]
Content: Article | Authors: Partha S. Mohanram, Shyam V. Sunder | Source: STERNbusiness (NYU) | Subject: Finance | Industry: Investing
When Google announced in April that it would go public this year, some investors’ eyebrows rose over the plan to issue a class of super shares to ensure that the founders keep control. Each of the Class B shares reserved for insiders will carry 10 votes; ordinary Class A shares sold to the public will have one vote. Yet shareholders-rights groups have long complained that … [ Read more ]
Content: Article | Source: Knowledge@Wharton | Subject: Finance | Industry: Investing
Does socially responsible investing (SRI) hurt (or help) returns on a risk adjusted basis? Of course theoretically it seemingly should lower pecuniary returns, but empirically it seems that every researcher has a different answer. Now Derwall, Guenster, Bauer, and Koedijk present their views on the argument. The authors form portfolios based on Innovest eco-efficiency scores. The finding? “After controlling for … [ Read more ]
Content: Article | Authors: Jeroen M.M Derwall, Kees C.G. Koedijk, Nadja Guenster, Rob Bauer | Source: Social Science Research Network (SSRN) | Subjects: Finance, Social Responsibility | Industry: Investing
Much research has been devoted to what is often called herding behavior. This is the idea that investors trade just because others are trading. This is often cited as evidence of irrationality by finance behavorialists. (Is that a word? It should be!) Grinblatt, Keloharju, and Ikaheimo examine this type of behavior by looking at car purchases. No, really. … [ Read more ]
Content: Article | Authors: Mark Grinblatt, Matti Keloharju, Seppo Ikaheimo | Source: Social Science Research Network (SSRN) | Subjects: Finance, Industry Specific | Industry: Investing
What counts isn’t the bottom line but rather how it is calculated.
Content: Article | Author: Tim Koller | Source: McKinsey Quarterly | Subjects: Accounting, Finance | Industry: Investing
The field of social-purpose investing is growing and becoming more sophisticated. Should investors expect lower returns to benefit society? A new Harvard Business School study examines the question.
Content: Article | Author: Manda Salls | Source: Harvard Business School (HBS) Working Knowledge | Subjects: Finance, Social Responsibility | Industry: Investing
Market efficiency is a tough thing to beat. Go ahead, find an anomaly and then have it torn to bits in future papers. Lesmond, Schill, and Zhou come to the defense of market efficiency and find that the reported profits from momentum investing are minimally overstated and possibly non-existent because of the higher than normal transactions costs involved with the necessary trading. … [ Read more ]
Content: Article | Authors: Chunsheng Zhou, David A. Lesmond, Michael J. Schill | Source: Social Science Research Network (SSRN) | Subjects: Finance, Industry Specific | Industry: Investing
Four ways to scan for volatility in the mutual fund universe.
Editor’s Note: this is one article in the entire August issue of Fidelity Outlook, which is a .pdf document. So, you will have to scroll down to page 8 (page 6 of the magazine) to read it.
Content: Article | Author: Jeff Schlegel | Source: Fidelity Outlook | Subjects: Finance, Industry Specific | Industry: Investing