Stocks aren’t always the best in the long-run
Advisors and managers will have to adopt a more nuanced view of risk as recognition of the frequency of equity underperformance becomes widespread.
Do sell-side analysts say “buy” while whispering “sell”?
Managers are more likely to vote for analysts who exhibit greater “say-buy/whisper-sell” behavior toward these man agers. This suggests that analysts reduce the accuracy of their public recommendations, thereby maintaining the value of their private advice to funds.
Estimating Long-Term Expected Returns
This study addresses a critical gap in financial forecasting by improving the accuracy of long-term expected return (E(R)) predictions. By evaluating various frameworks and proxies out-of-sample, free from biases like look-ahead bias, it provides more reliable methods for investors to make informed decisions about asset allocations.
Frog in the Pan Momentum: International Evidence
Underreaction to continuous news plays a key role in generating momentum internationally.
Time-Varying Drivers of Stock Prices
This paper examines the time-varying roles of subjective expectations in driving stock price and return variations.
Factors are global, respectable and repeatable
The propagation of factors actually reflect valid characteristics of the markets and market fluctuations.
Financial Knowledge in Europe: Women Lag Men in their financial Literacy
This paper examines the level of financial literacy across the 27 EU member states, using data from the 2023 Flash Eurobarometer 525 survey.
Rethinking Asset Growth in Asset Pricing Models
Measures of asset growth add considerable explanatory power to asset pricing models, but wait, there’s a twist. The formulation for measuring asset growth in risk [...]
Accessing Private Markets: What Does It Cost?
By quantifying how non-performance-based fees dominate the cost structure, this research questions whether current fee models effectively align with investor interests, which could influence future fee arrangements and industry standards.
Can Artificial Intelligence outsmart seasoned equity analysts?
If the task is to identify a firm’s true profitability, can AI outsmart seasoned analysts?
FinTech Credit and Entrepreneurial Growth
Access to automated online credit boosts sales, transactions, and customer capital for firms, particularly in regions underserved by traditional banks.
Artificial intelligence, firm growth, and product innovation
AI-powered growth concentrates among larger firms and is associated with higher industry concentration. Our results highlight that new technologies like AI can contribute to growth and superstar firms through product innovation.
Reading the WSJ May Make You a Better Economist
How can textual analysis of business news, specifically The Wall Street Journal (WSJ), be used to measure the state of the economy?
Analysts set price targets using trailing P/E ratios
Trailing twelve-month P/E ratios account for 91% of the variation in analysts’ price targets. We construct a new kind of asset-pricing model around this fact and show that it explains the market response to earnings surprises.
The Economics of Private Equity
The paper examines key factors that influence the performance and success of private equity investments. Specifically, it focuses on the importance of manager selection, the role of LP sophistication and skill, the relationship between fund size and performance, the potential misalignment of incentives between GPs and LPs, and the benefits and risks associated with co-investment opportunities.
Investors trade Cryptos and Trad-Fi Differently
Retail traders are contrarian in stocks and gold, yet the same traders follow a momentum-like strategy in cryptocurrencies. The differences are not explained by individual characteristics, investor composition, inattention, differences in fees, or preference for lottery-like assets. We conjecture that retail investors have a model where cryptocurrency price changes affect the likelihood of future widespread adoption, which leads them to further update their price expectations in the same direction.
Can smart rebalancing improve factor portfolios?
This paper provides new evidence on the efficacy of prioritizing transactions so as to focus portfolio turnover on the trades that offer the strongest signals and hence the highest potential performance impact.
From Man vs. Machine to Man + Machine: The Art and AI of Stock Analyses
An AI analyst trained to digest corporate disclosures, industry trends, and macroeconomic indicators surpasses most analysts in stock return predictions. AI wins when information is transparent but voluminous. Humans provide significant incremental value in “Man + Machine,” which also substantially reduces extreme errors.
Fixing the poor performance of the book-to-market ratio
The authors effectively argue the case for intrinsic value and DCF based approaches to building Value factor strategies. The traditional value measures, especially the book-to-market ratio, are described as ineffective in today's market environment.
High school financial education courses in the United States
This article provides detailed insights into how high school financial education policies are implemented at the local level.