Can Investors Profit from the Prophets? Consensus Analyst Recommendations and Stock Returns

Can Investors Profit from the Prophets? Consensus Analyst Recommendations and Stock Returns
Author: Brad M. Barber
Publisher:
Total Pages: 47
Release: 2008
Genre:
ISBN:

In this paper we document that an investment strategy based on the consensus (average) analyst recommendations of security analysts earns positive returns. For the period 1986-1996, a portfolio of stocks most highly recommended by analysts earned an annualized geometric mean return of 18.8 percent, while a portfolio of stocks least favorably recommended earned only 5.78 percent. (In comparison, an investment in a value-weighted market index earned an annualized geometric mean return of 14.5 percent.) Alternatively stated, purchasing stocks most highly recommended yielded a return of 102 basis points per month. The magnitude of this return is surprisingly large, and is far greater than the size effect (negative 16 basis points) and book-to-market effect (17 basis points) for the same period. Even after controlling for these two effects, as well as for price momentum, we show that the strategy of purchasing stocks most highly recommended and selling short those least favorably recommended yielded a return of 75 basis points per month. These results are robust to partitions by time period and overall market direction, and are most pronounced for small and medium-sized firms. The abnormal returns also persist when we allow a lapse of up to 15 days before acting on the investment recommendations. There is no extant theory of asset pricing that explains these results.

Investment Blunders of the Rich and Famous-- and what You Can Learn from Them

Investment Blunders of the Rich and Famous-- and what You Can Learn from Them
Author: John R. Nofsinger
Publisher: FT Press
Total Pages: 328
Release: 2002
Genre: Business & Economics
ISBN: 0130668419

Nofsinger identifies the most common investor mistakes through the prism of the world's most public investment catastrophes. Using other people's money and other people's disasters, "Investment Blunders" teaches a wide range of critical lessons every investor must learn.

Investor Decision-Making and the Role of the Financial Advisor

Investor Decision-Making and the Role of the Financial Advisor
Author: Caterina Cruciani
Publisher: Springer
Total Pages: 170
Release: 2017-11-13
Genre: Business & Economics
ISBN: 3319682342

This book looks at financial advisory from a behavioural perspective, and focuses on how the nature of the relationship between advisors and clients may affect the ability of the advisor to perform its functions. Broken into three key parts, the book looks at the client, the advisor, and the relationship between the two. Chapters review relevant theories of decision-making under risk to understand the nature of clients’ decisions. The literature on advisors’ functions and the normative landscape regulating financial advisory are also addressed. Finally, this book reviews how behavioural finance has traditionally addressed portfolio selection and explains how trust can be seen as a viable avenue to maximize advisors’ effectiveness and pursue clients’ needs. This book will be of interest to both behavioural finance scholars and practitioners interested in understanding what the future of financial advisory may have in stock.

What Wall Street Doesn't Want You to Know

What Wall Street Doesn't Want You to Know
Author: Larry E. Swedroe
Publisher: Truman Talley Books
Total Pages: 379
Release: 2007-04-01
Genre: Business & Economics
ISBN: 142990934X

Why do so many actively managed funds underperform? Why do passively managed funds provide superior returns, especially after taxes? What are the true interests of fund managers and the financial press? Most important, what strategy is in your best interest? What Wall Street Doesn't Want You to Know answers all these questions and more, giving you the inside information you need to become a successful investor who plays the winner's game-creating wealth-instead of the loser's game Wall Street wants you to play, of trying to pick stocks and time the market. In his revolutionary new guide, investment professional Larry Swedroe explains why active managers have rarely been able to add value to your portfolio over time. He dispenses with traditional Wall Street wisdom and experts and shows you how to invest the way really smart money invests today. What Wall Street Doesn't Want You to Know tells you exactly what Wall Street doesn't want you to know: how to avoid the pitfalls of short-term thinking and to invest so that you can create more wealth-much more wealth-over the long term.

Advances in Accounting Behavioral Research

Advances in Accounting Behavioral Research
Author: Vicky Arnold
Publisher: Emerald Group Publishing
Total Pages: 249
Release: 2006-06-05
Genre: Business & Economics
ISBN: 0762313536

Presents an empirical research in accounting theory. This book includes content that crosses into the fields of applied psychology, sociology, management science, and economics.

Corporate Governance 1e

Corporate Governance 1e
Author: Steen Thomsen
Publisher: McGraw Hill
Total Pages: 393
Release: 2012-04-16
Genre: Business & Economics
ISBN: 0077145518

This exciting new text provides a complete introduction to Corporate Governance. It deals with the control and direction of companies by boards, owners and company law, and also looks at the mechanisms of governance and the different governance systems around the world. Part 1: is a non-technical overview of the relevant theories, governance mechanisms and the country models.Part 2: looks at some of the most important governance mechanisms in detail.Part 3: studies individual international corporate governance systems.Part 4: wraps up with a discussion on governance practices.

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT

SECURITY ANALYSIS AND PORTFOLIO MANAGEMENT
Author: SAMUEL THOMAS
Publisher: PHI Learning Pvt. Ltd.
Total Pages: 257
Release: 2014-01-01
Genre: Business & Economics
ISBN: 8120348303

This book on Security Analysis and Portfolio Management is a comprehensive source of information and analysis for students and practitioners. The distinguishing feature of the book is the detailed coverage of the regulatory environment, which consists of the current and updated rules and regulations, tax-environment and the practice of investment in the securities market in India. The book has been written keeping in mind the potential investor and an average student. It addresses all their doubts and concerns and makes them informed about the money market. This well organised, lucidly written text covers various aspects of the portfolio management, ranging from analysis to revision and then performance evaluation of the portfolio. Also discusses in detail the securities market, derivatives and risk evaluation that helps in understanding the trading system better and making quality investment decisions. Besides explaining the theoretical concepts of portfolio management, the book provides a detailed analysis of the latest development in the securities trading. It is meant to be a ‘single window book’ covering the SAPM syllabus of almost all the Indian Universities and institutes conducting MBA/PGDM or MCom programmes. The book will be equally useful for the students of ICAI, ICWAI as well as for investment courses conducted by NSE. Key Features • Easy to understand by the readers even if they have not been exposed to higher mathematics.• Vast coverage of the SAPM topics.• Several worked-out problems in relevant chapters to aid and assist students and teacher alike.• Detailed discussion on Indian stock and share market in context to the country’s current scenario.

The Oxford Handbook of the Sociology of Finance

The Oxford Handbook of the Sociology of Finance
Author: Karin Knorr Cetina
Publisher: Oxford University Press, USA
Total Pages: 627
Release: 2012-11-29
Genre: Business & Economics
ISBN: 0199590168

The Handbook brings together leading international scholars to provide a comprehensive overview of research and theory on the sociology of finance and the workings of financial institutions and financial markets. It will serve as a reference point for this rapidly expanding discipline.

Evolutionary Finance

Evolutionary Finance
Author: B. Dowling
Publisher: Springer
Total Pages: 314
Release: 2005-08-10
Genre: Business & Economics
ISBN: 0230502199

The purpose of this book is to introduce the field of bioinformatics to financial modelling. It focuses on the way information informs price, and constructs a framework to explain information generation and the agglomeration process, enabling the reader to make more effective financial decisions. Based on all aspects of applied finance, this book uses informational analysis to help the reader understand the similarities between biomathematics and financial mathematics.