Investing Research Articles

Is the Bullish Percent Index a useful indicator of overall stock market or sector direction by reliably identifying overbought/oversold conditions from which stock prices are likely to revert? In a study published in the 2005 Journal of Technical Analysis, Andrew Hyer relates the simple average Bullish Percent across 40 stock market sectors (BPAVG) to future… Keep Reading

…the difference between expert and non-expert performance in investing and financial forecasting is small, making it difficult to discover the nature of financial expertise. Tests of expertise must be realistic.

…fundamental analysis (especially accrual-related indication of poor earnings quality) helps valuation-motivated short sellers identify stocks likely to experience reversal of strong past returns.

…in international markets, secondary share offerings reliably predict poor future stock returns, but share buybacks predict good future returns only for small firms.

…evidence does not support a model of funds flowing predictably back and forth between stocks and T-bills as investors overreact and correct to perceived crises.

…unusual trading by insiders helps isolate which short sellers know what they are doing, and vice versa.

…successful momentum trading may depend critically on restricting consideration to stocks with the lowest total transaction costs.

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… Keep Reading

…some individual investors/traders do consistently earn economically significant abnormal returns.

…both individual stocks and broad funds have, on average, appreciated overnight and stalled or declined during the trading day over the past 14 years. The first hour of trading may be the worst hour.