Investing Research Articles

…in the words of the authors: “The momentum effect, both in the UK and globally, has been pervasive and persistent. Though costly to implement on a standalone basis, all investors need to be acutely aware of momentum. Even if they do not set out to exploit it, momentum is likely to be an important determinant of their investment performance.”

…investors on the whole base their (mis)perceptions of risk and return on feelings rather than rational pricing analysis. Contrarians may be able to exploit the underpricing of “despised” stocks by focusing on small value.

…investors appear to focus on underperforming/losing stocks, cut them more slack and put more money into them.

…investors may want to get a fresh hedge fund horse every two or three years.

…the extraordinary performance claimed by IntelligentValue for the Retracement-Value portfolio is likely due to a combination of early good luck and a favorable assumption about trade prices. Investors/traders considering such active trading services should carefully evaluate their trading costs/frictions.

…changing public beliefs in how the economy works (and thereby valuation models) substantially affect long-term interest rates and asset prices. Current beliefs, focused on nominal rather than real interest rates, foster irrational overpricing of assets.

…traders employing frequent trading strategies such as that offered by VRTrader.com must achieve low trading friction and be prepared for frequent losses and high return volatility among individual trades. Specifically for VRTrader.com, they may also want to ignore short trade recommendations.

…past performance is significantly indicative of future performance among bond mutual funds.

…presumably sophisticated hedge fund investors as a group chase past returns and fail to time their investments successfully.

…the apparent outperformance of the The Trend Trade Letter may disappear after correcting for trading frictions, market conditions and data errors.