Investing Research Articles

…principles of evolutionary biology such as competition, mutation, reproduction, and natural selection drives the evolution of financial markets.

…expect single-digit long-term returns from stocks.

…investor sentiment tends to “predict” the past.

…very recent data suggests that short sellers may have lost their ability to predict bad news and stock price declines.

…mutual funds may function mostly as passive vehicles through which active individual investors (reallocators) voluntarily transfer wealth to public corporations. By doing the opposite of these individuals, one can construct a portfolio with high returns. By ceasing reallocations, mutual fund investors in aggregate could boost their Sharpe ratio by 9%.

…front-running the predictable effects of unusual mutual fund inflows and outflows on stocks held in common offers significant excess returns.

…situations involving herded traders and/or a small number of shareholders are good candidates for producing mispriced stocks.

…expertise does not mitigate bias. Even highly experienced investors/traders should consider measuring their estimation errors for related tasks to calibrate their judgments.

…portfolio changes after achieving the Morningstar 5-star rating hurt fund performance, and investors should be cautious about using this rating as the principal means of selecting mutual funds. Handling large cash inflows attracted by the high rating may be the culprit.

If your crystal ball has not been working so well…