Investing Research Articles

How do financial advisors affect the investing practices of individual investors? Does their advice decisively improve client performance, or are other factors more explanatory? In their February 2009 paper entitled “The Influence of Financial Advisors on Household Portfolios: A Study on Private Investors Switching to Financial Advice”, Ralf Gerhardt and Andreas Hackethal compare the portfolios… Keep Reading

Do hedge fund investors actually receive the returns reported for hedge funds, or does the timing of investments in these funds substantially affect experienced returns? In the March 2009 version of their paper entitled “Higher Risk, Lower Returns: What Hedge Fund Investors Really Earn”, Ilia Dichev and Gwen Yu measure actual hedge fund investor returns… Keep Reading

…traders may be able to exploit information on hedger and speculator net positions in the Commitment of Traders report to time positions in associated commodity futures.

…investors may be able to boost net returns by timing investments according to an index of leading economic indicators. However, success may depend critically on continually adapting the index to current economic conditions.

…investors should generally focus on the earnings estimates rather than the stock recommendations of equity analysts around the globe. Stock recommendations may offer incremental value (only) in countries with weak legal systems.

Capitalization-weighted stock indexes arguably incorporate a performance drag by overweighting overvalued stocks and underweighting undervalued stocks. In their February 2009 paper entitled “Fundamental Indexing: An Analysis of the Returns, Risks and Costs of Applying the Strategy”, Roel Houwer and Auke Plantinga examine the raw and risk-adjusted returns of hypothetical indexes of European stocks weighted by… Keep Reading

…German investor sentiment correctly anticipates equity market moves over the next few months to some degree. U.S. investor sentiment used to to be a contrarian indicator for equity market moves over coming months, but its predictive power has disappeared.

…evidence indicates that discount retail broker clients lose money on average to both non-discount retail broker clients and institutional investors, while non-discount brokerage clients have some success trading against institutions.

…investors may be able to exploit a stock price effect by focusing on the associated abnormally positive return during the first calendar quarter.

…adjusting asset class allocations according to key economic indicators may help investors manage risk and/or boost long-term returns.