Empowering Investors Through Education Actually Works!

By |January 18th, 2022|Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

Empowering investors through education is a foundational tenet of our firm and a big reason why we write these posts. The article we cover here is a meta-analysis 76 randomized studies on the impacts and design of financial education, a topic we've hit on before. It' almost cliche now to hear parents and educators demand schools take the initiative to make financial education a high priority. However, it's reasonable to ask, does financial education even work?

What Do Mutual Fund Investors Really Care About?

By |January 6th, 2022|Research Insights, Larry Swedroe, Academic Research Insight, Behavioral Finance, ETF Investing|

Are individuals just naïve performance chasers, unaware of the financial literature, or are they sophisticated investors? Pretty much.

Do Mutual Funds Increase Disclosure Complexity to Hide Fees?

By |December 22nd, 2021|Financial Planning, Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance, Corporate Governance|

Do mutual funds create unnecessarily complex disclosures and fee structures to obfuscate weak net performance? Yes.

Value and Momentum Factors? Naw, Focus on the Music Factor!

By |December 6th, 2021|Relative Sentiment, Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

Can market sentiment be derived from the tunes that your fellow countrymen are listening to? According to the research summarized here you'll find that there is important market information buried in the listening habits of Spotify users.

Can Prospect Theory Explain the Value and Momentum Factors?

By |November 29th, 2021|Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

Today we summarize an investigation into the usefulness of Prospect Theory and Narrow Framing to evaluate whether a new model can help explain 22 prominent market anomalies.

Should We Never Invest in Individual Stocks?

By |November 26th, 2021|Research Insights, Guest Posts, Academic Research Insight, Behavioral Finance|

Due to the surprising headline that treasury bills seemingly outperform stocks, practitioners are starting to ask: Should I invest in individual stocks?

How Crazy is the Current Market? Not that Crazy.

By |November 10th, 2021|Research Insights, Behavioral Finance|

Eric Balchunas had a recent tweet that I found fascinating. Eric's tweet merely captures the tip of the iceberg with respect to the current market environment, which certainly feels "bubbly."[ref]But who knows. If my allocations [...]

The Momentum Factor is Driven by Behavioral Bias, Not Risk

By |November 9th, 2021|Research Insights, Factor Investing, Academic Research Insight, Behavioral Finance, Momentum Investing Research|

Momentum, Reversals, and Investor Clientele Andy Chui, Avanidhar Subrahmanyam, and Sheridan TitmanReview of Financial Studies, 2021A version of this paper can be found hereWant to read our summaries of academic finance papers? Check out our Academic Research [...]

Fee Disclosures Can Improve Investor Decision-Making

By |November 1st, 2021|ESG, Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance, Corporate Governance|

Out of Sight No More? The Effect of Fee Disclosures on 401(k) Investment Allocations Kronlund, Pool, Sialm and StefanescuJournal of Financial Economics, 2021A version of this paper can be found hereWant to read our summaries of [...]

A History of Wealth Creation in the U.S. Equity Markets

By |October 21st, 2021|Research Insights, Larry Swedroe, Academic Research Insight, Behavioral Finance|

Hendrik Bessembinder contributes to the literature on the returns to public equity investment diversification benefits with his study “Wealth Creation in the US Public Stock Markets 1926-2019,” published in the April 2021 issue of The [...]

Studying Financial Idea “Infection Rates”

By |October 4th, 2021|Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

The rate of communication Huang, Hwang and LouJournal of Financial Economics, 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 the [...]

Impact Investing: When Finance Meets Psycology

By |September 13th, 2021|ESG, Research Insights, Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

Impact Investing: Killing Two Birds with One Stone? Caseau and GrolleauFinancial Analyst Journal, 2020A version of this paper can be found hereWant to read our summaries of academic finance papers? Check out our Academic Research Insight category What [...]

Behavioral Finance Warning: Humans Love Complexity

By |August 3rd, 2021|Research Insights, Factor Investing, Academic Research Insight, Behavioral Finance|

People systematically overlook subtractive changes Gabrielle S. Adams, Benjamin A. Converse, Andrew H. Hales & Leidy E. Klotz Nature 592, 258-161A version of this paper can be found hereWant to read our summaries of academic finance papers? Check out our Academic Research [...]

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 Suggests that Advisor Fees Might be Justified

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 [...]

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