Investing Research Articles

…individual investors systematically show attention-driven herd-like behaviors.

…a high level of trading activity usually underperforms.

…just because there is a crowd of traders does not mean there is wisdom.

…Burton Malkiel continues to believe that the stock market is inexploitably efficient.

Could we make a bundle day trading? In their May 2004 paper entitled “Do Individual Day Traders Make Money? Evidence from Taiwan”, Brad Barber, Yi-Tsung Lee, Yu-Jane Liu and Terrance Odean assess the success of day traders in the Taiwan stock market. Using detailed individual trading records, they find that:

…consumer confidence is not a worthwhile indicator for stock market investors and traders.

…careful screening of value stocks using accounting fundamentals may be able to enhance returns significantly.

…the Fed Model is inferior to fundamental valuation in predicting long-term stock returns, but it may have some tactical value.

…mean reversions of fundamental ratios are key predictors of future stock market returns.

…investor and analyst herding and cascading help explain some observed stock market price phenomena.