Investing Research Articles

…a small-stock buy-and-hold approach benefits fully from upside volatility (beta) but does not suffer the entire penalty of downside volatility.

Are stock market forecasters prone to hyperbole? Is there logic to predicting plunges and melt-ups at probabilities unjustified by rigorous empirical analysis? In their February 2007 paper entitled “Probability Elicitation, Scoring Rules, and Competition among Forecasters”, Kenneth Lichtendahl, Jr. and Robert Winkler apply game theory to model the behavior of forecasters who pit themselves not… Keep Reading

…Benjamin Graham-style value investing still works but is more difficult to execute than in the past because severe undervaluation has become rarer.

…it appears that some short selling is manipulative, seeking to scare other traders out of their holdings during sharp but temporary engineered price drops.

…there is an “information risk premium” such that stocks not covered by the news media yield significantly higher future returns than stocks heavily covered, even after accounting for other widely used risk factors.

…hedge fund managers seem to be no better at long-equity investing than mutual fund managers; they do not outperform the market.

…share repurchase announcements persist as good indicators of stock undervaluation, most significantly amplified by poor returns over the prior six months.

…the sentiment of institutional (private) investors probably has some (no) value in predicting stock market returns over a six-month horizon.

Reader Richard Beddard, editor of Interactive Investor, flagged a series of three studies by Keith Anderson and Chris Brooks on approaches to enhancing the value premium via empirical analysis of the price-earnings ratio (P/E) calculated with lagged earnings. One study seeks to optimize value indication based on the extent and weighting of historical earnings used… Keep Reading

…there is a cycle of cash flow between companies and investors, as the former first sell shares, then buys the shares of other companies and finally buys back their own shares.