Investing Expertise

What evidence is there that economically significant financial expertise exists? How can research best discover where such expertise comes from and how it works? In the September 2005 draft of their paper entitled “The Enigma of Financial Expertise: Superior and Reproducible Investment Performance in Efficient Markets”, Anders Ericsson, Patric Andersson and Edward Cokely tackle these questions. Based on review of prior research in the context of a broad perspective on expertise across many fields, they conclude that: Keep Reading

Do the experts who arguably should have the most informed opinions, finance professors, believe that the U.S. stock market is efficient? Do they invest in accordance with their beliefs? In their August 2007 paper entitled “Market Efficiency and Its Importance to Individual Investors – Surveying the Experts”, James Doran, David Peterson and Colby Wright seek to answer these questions via an email-initiated electronic survey of over 4,000 finance professors at accredited U.S. universities and colleges. Using data provided by 642 qualified respondents, they conclude that: Keep Reading

But the market is just unsafe at any speed… Keep Reading

But other people were forecasting even higher… Keep Reading

Predicting Risk analyzing stormy weather… Keep Reading

Taking a break… Keep Reading

Via the semiannual Livingston Survey, the Federal Reserve Bank of Philadelphia solicits forecasts for the S&P 500 index (and many other U.S. economic measures) from economists in industry, government, banking and academia. How good are their forecasts? In his June 2007 paper entitled “Predicting Stock Price Movements: Regressions versus Economists”, Paul Soderlind examines the aggregate stock return forecasting ability of surveyed experts. Using median forecasts for stock market gains during the interval 6-12 months after survey dates and associated actual data for 1952-2005, he concludes that: Keep Reading

In their 2005 paper entitled “A Great Company Can Be a Great Investment”, Jeff Anderson and Gary Smith evaluate the stock returns of companies rated highest in Fortune magazine’s annual surveys of “America’s Most Admired Companies.” Survey respondents are senior executives, directors and securities analysts, and the questions asked seemingly relate indirectly or directly to the investment value of the companies named. Using lists for 1983 (survey inception) through 2004 (a total of 22 years) and associated stock return data for the publicly held companies on the lists, they conclude that: Keep Reading

The sponsors of retirement/endowment plans (public and corporate pension plans, unions, foundations and endowments) retain professionals to manage their funds. Do their decisions to hire and fire such professionals pan out? In other words, do their plans outperform the market after they change managers? In their May 2006 paper entitled “The Selection and Termination of Investment Management Firms by Plan Sponsors”, Amit Goyal and Sunil Wahal examine this question. Using data for 8,204/910 hiring/firing decisions by 3,591 plan sponsors during 1994-2003, they conclude that: Keep Reading

Readers recently requested evaluations of two different retail investment managers. Our reviews involve simply putting the information the firms make available on their web sites into the context of broad stock market research. Our findings for the two firms are similar, as follows: Keep Reading