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Could Investors Obtain Returns Using Analysts Recommendations
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Book Synopsis Could Investors Obtain Returns Using Analysts' Recommendations? by : Germán López Espinosa
Download or read book Could Investors Obtain Returns Using Analysts' Recommendations? written by Germán López Espinosa and published by LAP Lambert Academic Publishing. This book was released on 2009-09 with total page 64 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book examines the value of stock recommendations issued by financial analysts for the the period 1994-2003, using data from JCF Quant. In every month of the sample period, stocks are classified into three portfolios, and studied first by consensus recommendation level and then by changes of consensus level. Returns from the recommendation portfolios are estimated using different models in the context of the portfolio calendar-time methodology. The results obtained show that sell-side analysts are able to detect profitable investment opportunities. Investors may obtain significant positive risk-adjusted abnormal returns constructing a hedge portfolio, buying the best-recommended assets and simultaneously selling the worst consensus stocks. However, a portion of these returns could be attributed to their tendency to recommend the acquisition of big "value" stocks and the sale of small shares with negative price momentum. Finally, the value of an analyst's recommendations is independent of the level of information on the firm, expressed by company size or the number of analysts covering each firm.
Book Synopsis Can Investors Profit from the Prophets? Consensus Analyst Recommendations and Stock Returns by : Brad M. Barber
Download or read book Can Investors Profit from the Prophets? Consensus Analyst Recommendations and Stock Returns written by Brad M. Barber and published by . This book was released on 2008 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.
Book Synopsis Can Investors Profit from the Prophets? by : Brad Barber
Download or read book Can Investors Profit from the Prophets? written by Brad Barber and published by . This book was released on 1998 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Securities Industry Yearbook written by and published by . This book was released on 1983 with total page 524 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis When Buy Means Sell by : Eric Shkolnik
Download or read book When Buy Means Sell written by Eric Shkolnik and published by McGraw Hill Professional. This book was released on 2002-09-22 with total page 241 pages. Available in PDF, EPUB and Kindle. Book excerpt: Proven strategies for knowing which stock analysts to believe, which to ignoreand when to sell Investors are tired of losing money to the bad calls and noncalls of Wall Street analysts, especially on the heels of Enron and other "surprise" stock meltdowns. Instead of giving up, When Buy Means Sell presents an innovative, market-tested system for knowing which recommendations to trust, sniffing out conflicts of interest, and making buy and sell decisions based on valuable, impartial information. The first fresh approach to this age-old problem, When Buy Means Sell shows investors how to make sense ofand profit fromwhat Wall Street analysts are really saying, by revealing: Who the real prophets arefrom individual stars to leading firms How to read analyst calls like an insider Where to find the truly valuable information
Book Synopsis Should Investors Follow the Prophets or the Bears? Evidence on the Use of Public Information by Analysts and Short Sellers by : Michael S. Drake
Download or read book Should Investors Follow the Prophets or the Bears? Evidence on the Use of Public Information by Analysts and Short Sellers written by Michael S. Drake and published by . This book was released on 2010 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether shorts and analysts differ in their use of fundamental and other information that is predictive of future returns. Remarkably, open short interest is significantly associated in the expected direction with all eleven variables examined. In contrast, analysts tend to positively recommend stocks with high growth, high accruals, and low book-to-market ratios -- despite these variables having a negative association with future returns. These results suggest that short sellers can serve as an alternative information intermediary for investors. We then investigate the profitability of using short interest in trading. We find abnormal returns (1.11 percent per month) from a zero-investment strategy that 1) shorts firms with highly favorable analyst recommendations (buy signal) but high short interest (sell signal), and 2) buys firms with highly unfavorable analyst recommendations (sell signal) but low short interest (buy signal). Short interest, therefore, captures predictive information that can be used by investors in trading against analysts' recommendations to increase returns.
Book Synopsis Best Practices for Equity Research (PB) by : James Valentine
Download or read book Best Practices for Equity Research (PB) written by James Valentine and published by McGraw Hill Professional. This book was released on 2011-01-07 with total page 465 pages. Available in PDF, EPUB and Kindle. Book excerpt: The first real-world guide for training equity research analysts—from a Morgan Stanley veteran Addresses the dearth of practical training materials for research analysts in the U.S. and globally Valentine managed a department of 70 analysts and 100 associates at Morgan Stanley and developed new programs for over 500 employees around the globe He will promote the book through his company's extensive outreach capabilities
Book Synopsis Prophets and Losses by : Brad M. Barber
Download or read book Prophets and Losses written by Brad M. Barber and published by . This book was released on 2008 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: After a string of years in which security analysts' top stock picks significantly outperformed their pans, the year 2000 was a disaster. During that year the stocks least favorably recommended by analysts earned an annualized market-adjusted return of 48.66 percent while the stocks most highly recommended fell 31.20 percent, a return difference of almost 80 percentage points. This pattern prevailed during most months of 2000, regardless of whether the market was rising or falling, and was observed for both tech and non-tech stocks. While we cannot conclude that the 2000 results are necessarily driven by an increased emphasis on investment banking by analysts, our findings should add to the debate over the usefulness of analysts' stock recommendations to investors. They should also serve to alert researchers to the possibility that excluding the year 2000 from their sample period could have a significant impact on any conclusions they draw concerning analysts' stock recommendations.
Book Synopsis The Global-Investor Book of Investing Rules by : Philip Jenks
Download or read book The Global-Investor Book of Investing Rules written by Philip Jenks and published by FT Press. This book was released on 2002 with total page 514 pages. Available in PDF, EPUB and Kindle. Book excerpt: Profiles of 150 successful fund managers, traders, analysts, economists, and investment experts offer advice, techniques, and ideas to increase returns and control risks in investing. Some of the areas of specialty discussed include international markets and capital flows, company valuation, liquidi
Book Synopsis Can Investors Profit from Security Analyst Recommendations? by : Sung Jun Park
Download or read book Can Investors Profit from Security Analyst Recommendations? written by Sung Jun Park and published by . This book was released on 2018 with total page 23 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper revisits the question of whether investors can benefit from consensus recommendations of stock market analysts in US equity markets. To examine the profitability net of transactions cost, we calculate transactions cost based on effective tick spread. We find that transactions cost becomes noticeably lower from 2001 and the strategy of purchasing 'strong buy' stocks and shorting 'strong sell' stocks yields the abnormal returns of 4.7-5.8% per year during the period of 2001-2016, even after accounting for transactions cost. We also find that 'strong buy (sell)' stocks are growth (value) firms and short-term winners (losers). We discuss our empirical results in the context of market efficiency.
Book Synopsis Risk Profiling and Tolerance: Insights for the Private Wealth Manager by : Joachim Klement
Download or read book Risk Profiling and Tolerance: Insights for the Private Wealth Manager written by Joachim Klement and published by CFA Institute Research Foundation. This book was released on 2018-05-01 with total page 150 pages. Available in PDF, EPUB and Kindle. Book excerpt: If risk aversion and willingness to take on risk are driven by emotions and we as humans are bad at correctly identifying them, the finance profession has a serious challenge at hand—how to reliably identify the individual risk profile of a retail investor or high-net-worth individual. In this series of CFA Institute Research Foundation briefs, we have asked academics and practitioners to summarize the current state of knowledge about risk profiling in different key areas.
Book Synopsis Investors' Reaction to the Recommendations of Analysts Published in the Financial Post Hot Stock Column by :
Download or read book Investors' Reaction to the Recommendations of Analysts Published in the Financial Post Hot Stock Column written by and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Hold 'em? Using Financial Statement Information to Pick Winners and Losers when Consensus Analysts' Recommendations are Neutral by : James Michael Wahlen
Download or read book Hold 'em? Using Financial Statement Information to Pick Winners and Losers when Consensus Analysts' Recommendations are Neutral written by James Michael Wahlen and published by . This book was released on 2014 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: Sell-side financial analysts commonly issue recommendations to buy, sell, or hold particular firms' shares. Hold recommendations do not provide investors with directional recommendations to change their investment positions. We develop and test predictions about whether users of analysts' recommendations can exploit financial statement information to identify hold-recommendation firms that will generate abnormal returns in the coming year. Our approach summarizes financial statement ratios into a predictor of the likelihood a firm will generate an earnings increase in the coming year. We find that hold-recommendation firms with the greatest likelihood of future earnings increases generate average abnormal returns that significantly exceed those of hold-recommendation firms with the lowest likelihood of future earnings increases. We find that a trading strategy that utilizes our approach to pick stocks from among the set of hold recommendations generates average annual abnormal returns of 16.4 percent over our 12-year sample period, after controlling for previously identified predictors of expected returns. Our results provide insights for accounting and finance academics, as well as for institutional investors and other users of sell-side analyst recommendations.
Download or read book The Behavior Gap written by Carl Richards and published by Penguin. This book was released on 2012-01-03 with total page 179 pages. Available in PDF, EPUB and Kindle. Book excerpt: "It's not that we're dumb. We're wired to avoid pain and pursue pleasure and security. It feels right to sell when everyone around us is scared and buy when everyone feels great. It may feel right-but it's not rational." -From The Behavior Gap Why do we lose money? It's easy to blame the economy or the financial markets-but the real trouble lies in the decisions we make. As a financial planner, Carl Richards grew frustrated watching people he cared about make the same mistakes over and over. They were letting emotion get in the way of smart financial decisions. He named this phenomenon-the distance between what we should do and what we actually do-"the behavior gap." Using simple drawings to explain the gap, he found that once people understood it, they started doing much better. Richards's way with words and images has attracted a loyal following to his blog posts for The New York Times, appearances on National Public Radio, and his columns and lectures. His book will teach you how to rethink all kinds of situations where your perfectly natural instincts (for safety or success) can cost you money and peace of mind. He'll help you to: • Avoid the tendency to buy high and sell low; • Avoid the pitfalls of generic financial advice; • Invest all of your assets-time and energy as well as savings-more wisely; • Quit spending money and time on things that don't matter; • Identify your real financial goals; • Start meaningful conversations about money; • Simplify your financial life; • Stop losing money! It's never too late to make a fresh financial start. As Richards writes: "We've all made mistakes, but now it's time to give yourself permission to review those mistakes, identify your personal behavior gaps, and make a plan to avoid them in the future. The goal isn't to make the 'perfect' decision about money every time, but to do the best we can and move forward. Most of the time, that's enough."
Book Synopsis Institutional Investors, Analysts' Recommendations, Annual Reports, Textual Analysis and Stock Returns by : Andreas Chouliaras
Download or read book Institutional Investors, Analysts' Recommendations, Annual Reports, Textual Analysis and Stock Returns written by Andreas Chouliaras and published by . This book was released on 2015 with total page 41 pages. Available in PDF, EPUB and Kindle. Book excerpt: I analyze 18510 SEC EDGAR Form 10-K (annual reports), for NASDAQ, NYSE and AMEX (NYSE MKT) stocks, along with 176565 SEC EDGAR Form 13-F (quarterly reports of institutional investors holdings), and analysts' recommendations, from 2001 until 2015. I find that (i) 10-K pessimism negatively affects stock holdings after the filing, (ii) institutions do not appear to have forecasting power as to how pessimistic the annual report will be, as they do not adjust their holdings in the pessimistic stocks before the 10-K filing takes place, (iii) an increase in the number of institutional investors that hold a stock leads to an increase in stock prices after the 10-K filing (iv) institutions increase their positions in stocks that had positive returns one (1) to twelve (12) months before the 10-K filing (v) analysts' recommendations are affected by 10-K pessimism three (3) to nine (9) months after the 10-K filing, (vi) contrary to the cross-section of institutional investors, analysts do appear to have some forecasting power over how pessimistic the annual report will be, a few months before the 10-K filing month.
Book Synopsis Why Moats Matter by : Heather Brilliant
Download or read book Why Moats Matter written by Heather Brilliant and published by John Wiley & Sons. This book was released on 2014-06-24 with total page 245 pages. Available in PDF, EPUB and Kindle. Book excerpt: Incorporate economic moat analysis for profitable investing Why Moats Matter is a comprehensive guide to finding great companies with economic moats, or competitive advantages. This book explains the investment approach used by Morningstar, Inc., and includes a free trial to Morningstar's Research. Economic moats—or sustainable competitive advantages—protect companies from competitors. Legendary investor Warren Buffett devised the economic moat concept. Morningstar has made it the foundation of a successful stock-investing philosophy. Morningstar views investing in the most fundamental sense: For Morningstar, investing is about holding shares in great businesses for long periods of time. How can investors tell a great business from a poor one? A great business can fend off competition and earn high returns on capital for many years to come. The key to finding these great companies is identifying economic moats that stem from at least one of five sources of competitive advantage—cost advantage, intangible assets, switching costs, efficient scale, and network effect. Each source is explored in depth throughout this book. Even better than finding a great business is finding one at a great price. The stock market affords virtually unlimited opportunities to track prices and buy or sell securities at any hour of the day or night. But looking past that noise and understanding the value of a business's underlying cash flows is the key to successful long-term investing. When investors focus on a company's fundamental value relative to its stock price, and not where the stock price sits today versus a month ago, a day ago, or five minutes ago, investors start to think like owners, not traders. And thinking like an owner will makes readers better investors. The book provides a fundamental framework for successful long-term investing. The book helps investors answer two key questions: How can investors identify a great business, and when should investors buy that business to maximize return? Using fundamental moat and valuation analysis has led to superior risk-adjusted returns and made Morningstar analysts some of the industry's top stock-pickers. In this book, Morningstar shares the ins and outs of its moat-driven investment philosophy, which readers can use to identify great stock picks for their own portfolios.
Book Synopsis Reading Minds and Markets by : Jack Ablin with
Download or read book Reading Minds and Markets written by Jack Ablin with and published by FT Press. This book was released on 2009-06-19 with total page 304 pages. Available in PDF, EPUB and Kindle. Book excerpt: “Read Jack Ablin’s ‘five factor’ approach to investing and you not only will sleep better at night, you’ll be a smarter, wiser human being. Ablin takes you on his twenty-year journey toward a unified, rational approach to investing that can help you weather even the most turbulent financial storms. This book may be one of the best investments you will ever make.” --John Callaway, Senior Correspondent, WTTW, Public Television “This book is based on verifiable data trends and years of experience with a broad array of economic and market numbers. Regret over investment losses need not lead investors to disengage their brains or to be robbed again by schemes hawked as ‘new and improved.’ Reading Minds and Markets will help jump-start an honest investment dialogue that has been sidetracked by excesses of greed and fear.” --Bill Barnhart, Former Financial Editor and Columnist for the Chicago Tribune “The author has taken the complex world of investing and provided an extremely practical approach to success where others have failed miserably. His grasp of the financial markets makes him eminently qualified to develop an extremely sound and practical approach in order to protect and enhance wealth for investors.” --Edward (“Ned”) Riley, Jr., Former Chief Investment Officer for State Street Global Advisors and Chief Investment Officer, Riley Asset Management “With nearly three decades of experience, Jack Ablin’s superb intellectual thinking is reflected in Reading Minds and Markets. This is great reading for the motivated investor.” --Professor Israel Shaked, Finance and Economics Department, Boston University, School of Management You can do more to protect yourself from market risks and down markets. The secret: Understand the big picture and know when to shift money toward more promising industry groups, sectors, or asset classes. This strategy is called “global macro investing”--and, as Chief Investment Officer for Harris Private Bank, Jack Ablin has used it to deliver results for many of the world’s wealthiest families and individuals. In Reading Minds and Markets, Ablin distills his techniques into a remarkably simple, commonsense five-step plan that any investor can use. You’ll discover how to anticipate some of the more significant shifts in global markets and move investments toward areas that are more likely to grow. Equally important, you’ll learn how to overcome bad habits that inevitably lead to failure--habits all too often reinforced by the financial media. In today’s unforgiving markets, you need to make smarter high-level decisions and fewer mistakes: This book will help you do both. Why you must take a top-down view of the market--and how to do it Avoid getting caught off-guard in choppy, highly volatile markets Respond to the market’s powerful signals about relative risk Master strategies for improving return without increasing risk Discover the five factors that consistently tell you where to invest Cut through the clutter of irrelevant data: find what matters and use it Stop being your own worst enemy Overcome the #1 obstacle to structuring your best portfolio: human nature www.readingmindsandmarkets.com
