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

By |2020-12-21T09:36:24-05:00December 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 |2020-12-02T18:14:39-05:00December 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 |2020-11-23T10:09:25-05:00November 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 |2020-09-28T13:19:43-04:00October 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 |2020-03-09T09:57:42-04:00March 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 |2019-11-25T09:22:02-05:00November 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 |2019-11-05T11:11:10-05:00November 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 [...]

Can Anomalies Survive Insider Disagreements

By |2019-10-29T10:17:01-04:00October 30th, 2019|Research Insights, Behavioral Finance|

What is the relationship between insider trades and anomalies? Anginer, Hoberg and Seyhun A version of the paper can be found here. Want to read our summaries of academic finance papers? Check out our Academic Research [...]

Short-Duration Stock Anomaly: Risk or Mispricing

By |2019-11-25T17:41:23-05:00October 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 |2019-09-19T09:11:32-04:00September 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 |2019-09-17T15:04:15-04:00August 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 |2020-05-11T08:04:24-04:00June 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 [...]

The Folly of Hiring Winners and Firing Losers

By |2019-05-13T11:43:51-04:00May 14th, 2019|Research Insights, Behavioral Finance|

One of the mistakes that prevent investors from achieving their goals is that when it comes to evaluating investments and investment strategies most think that three years is a long time, five years a very [...]

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

By |2019-06-18T09:04:24-04:00April 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 [...]

Aggregate Investor Confidence in the Stock Market

By |2019-04-15T08:50:30-04:00April 15th, 2019|Basilico and Johnsen, Academic Research Insight, Behavioral Finance|

Aggregate Investor Confidence in the Stock Market Christoph Meier Journal of Behavioral Finance, 2018 A version of this paper can be found here Want to read our summaries of academic finance papers? Check out our Academic Research [...]

Discipline: A Necessary Condition for Successful Investing

By |2018-12-31T11:41:58-05:00December 31st, 2018|Research Insights, Larry Swedroe, Guest Posts, Behavioral Finance|

A good friend, Sherman Doll, related the following story. Sherman has been a two-line sport kite flier for years. While not a pro, he has learned a few tricks from observing the flying behavior of [...]

Do Security Analyst Recommendations Bet on or Against Academic Findings?

By |2017-10-16T08:10:03-04:00July 6th, 2017|Research Insights, Larry Swedroe, Behavioral Finance|

As my co-author Andrew Berkin, the director of research for Bridgeway Capital Management, and I explain in our new book, “Your Complete Guide to Factor-Based Investing,” there is considerable evidence of cross-sectional return predictability. Citing [...]

The Dividend Disconnect: Behavioral Finance Strikes Again

By |2017-08-18T16:55:39-04:00June 2nd, 2017|Research Insights, Behavioral Finance|

The first prediction in the paper is that "Capital Gains and Dividends Viewed as Distinct Desirable Attributes". But what does that mean? The authors highlight that when assessing stock positions, an investor has two options for how to assess the performance -- (1) simple price appreciation/depreciation or (2) total return. Note that price appreciation/depreciation is simply the price appreciation/depreciation on the position, while total return includes both the price appreciation/depreciation plus the dividend return. Directly from the paper: For many positions, either price changes or returns including dividends will yield the same category of gain or loss. However, some positions are at a gain when dividends are included, but at a loss without their inclusion. Do investors treat such positions as being at a gain or at a loss when evaluating whether to sell the position? This is equivalent to asking whether investors adjust for the mechanical decrease in shares price that results from dividend payments.

The Value Premium: Risk or Mispricing?

By |2017-08-18T16:55:06-04:00May 24th, 2017|Research Insights, Larry Swedroe, Other Insights, Behavioral Finance, Value Investing Research|

One of the great debates in finance is whether the source of the value premium is risk-based or a behavioral anomaly. In our book, “Your Complete Guide to Factor-Based Investing,” my co-author Andrew Berkin and [...]