The Misery Index and Future Equity Returns

By |July 15th, 2021|Research Insights, Larry Swedroe, Academic Research Insight, Behavioral Finance|

Prospect theory was developed by Daniel Kahneman and Amos Tversky in 1979. The theory starts with the concept of loss aversion—the observation that people react differently between potential losses and potential gains. Thus, people make [...]

Leading EMH Economist John Cochrane Advocates for Advisor Fees

By |July 8th, 2021|Research Insights, Guest Posts, Investment Advisor Education, Behavioral Finance, Active and Passive Investing|

Sorry for the clickbait, but Hoover Institute fellow and “Grumpy Economist" John Cochrane's answers to the seemingly benign question, "How should long-term investors form portfolios," is too important to both advisors and academics to overlook. [...]

This Time is Different? Consider Quantifying Subjective Priors

By |June 4th, 2021|Empirical Methods, Research Insights, Guest Posts, Academic Research Insight, Behavioral Finance|

This time is different. --John Templeton "This time is different," is a sentiment that leads many investors to stray from using data analysis in their investment decision process and more towards discretionary judgment.  The logic [...]

We Should Increase Trust in Financial Services

By |April 26th, 2021|Financial Planning, Research Insights, Basilico and Johnsen, Academic Research Insight, Investment Advisor Education, Behavioral Finance|

Trust and Financial Advice Burke and HungJournal of Pension Economics and Finance, 2021A version of this paper can be found hereWant to read our summaries of academic finance papers? Check out our Academic Research Insight category What are [...]

Does Crowdsourced Investing Work?

By |March 1st, 2021|Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

Extrapolative Beliefs in the Cross Section: What Can We Learn from the Crowds? Zhi Da, Xing Huang, Lawrence J. JinJournal of Financial Economics, 2020A version of this paper can be found hereWant to read our summaries [...]

Investing Based on Who you Follow on Social Media? A Real Thing?

By |December 21st, 2020|Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

Do Individual Investors Trade on Investment-related Internet Postings? Manuel Ammannt and Nic SchaubManagement Science, 2020A version of this paper can be found hereWant to read our summaries of academic finance papers? Check out our Academic Research Insight category [...]

A Short Research Library Outlining Why Traditional Stock Picking is Challenging

By |December 2nd, 2020|Factor Investing, Investor Education, Behavioral Finance|

There are no "right" answers when it comes to financial markets. There are generally trade-offs to all decisions. For example, stocking picking can be incredible and crush every other investment approach; but stock picking can [...]

What Matters to Individual Investors? Evidence from the Horse’s Mouth

By |November 23rd, 2020|Financial Planning, Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

What Matters to Individual Investors? Evidence from the Horse's Mouth James Choi and Adriana RobertsonJournal of Finance, 2020A version of this paper can be found hereWant to read our summaries of academic finance papers? Check out [...]

Lottery Preferences and Their Relationship with Factor Investing

By |October 1st, 2020|Skewness, Research Insights, Larry Swedroe, Academic Research Insight, Behavioral Finance, Low Volatility Investing|

Among the assumptions in the first formal asset pricing model, the CAPM, is that investors are risk-averse, they maximize the expected utility of absolute wealth, and they care only about the mean and variance of [...]

Do Insider Trades Provide Insights into Future Returns?

By |March 11th, 2020|Research Insights, Larry Swedroe, Academic Research Insight, Behavioral Finance|

The volume of work that has been done on insider transactions is not inconsequential, we've covered a variety of research on the topic in several blog posts just a few of which are here and [...]

Are Earnings Forecasts of Sell-side Analysts Biased?

By |November 26th, 2019|Research Insights, Larry Swedroe, Academic Research Insight, Behavioral Finance|

There is a substantial body of evidence linking various accounting ratios to expected stock returns. One explanation of the links is that they could be explained by the accounting ratios being associated with systematic sources [...]

What Returns Should Investors Expect from Private Equity

By |November 7th, 2019|Research Insights, Larry Swedroe, Behavioral Finance|

The collapse in interest rates, combined with historically high valuations (at least for U.S. stocks), have led many endowments, pension plans (especially those with large unfunded liabilities) and high net worth investors (such as those [...]

Short-Duration Stock Anomaly: Risk or Mispricing

By |October 1st, 2019|Research Insights, Factor Investing, Academic Research Insight, Behavioral Finance|

Cash Flow Duration and the Term Structure of Equity Returns Michael Weber A version of the paper can be found here. Want to read our summaries of academic finance papers? Check out our Academic Research Insight category. What [...]

Do Investors Focus Too Much on Price-Only Returns?

By |September 19th, 2019|Research Insights, Investor Education, Behavioral Finance|

Reconsidering Returns Samuel M Hartzmark, David H. Solomon A version of this paper can be found here Want to read our summaries of academic finance papers? Check out our Academic Research Insight category. What are the Research Questions? [...]

What Induces Children to Save (More)?

By |August 27th, 2019|Financial Planning, Research Insights, Investment Advisor Education, Behavioral Finance|

What Induces Children to Save (More)? Moritz Lukas (University of Hamburg) and Markus Nöth (University of Hamburg) A version of this paper can be found here Want to read our summaries of academic finance papers? Check [...]

The Curse of Popularity

By |June 20th, 2019|Research Insights, Larry Swedroe, Academic Research Insight, Behavioral Finance|

We can define popularity as the condition of being admired, sought after, well-known, and/or accepted. One would think popularity is a good thing. However, when it comes to investing, the research shows that along with [...]

Compound Your Knowledge Episode 9: Investor Confidence & Issues with Factor Investing

By |April 22nd, 2019|Compound Your Knowledge, Research Insights, Factor Investing, Podcasts and Video, Media, Behavioral Finance|

In this week's post, we discuss two posts. The first post, written by Elisabetta, examines a new method attempting to directly measure aggregate investor overconfidence. The second post, written by Larry Swedroe, examines issues that [...]

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