Top 5 Articles from August
1. Lie Detection for Investment Professionals: A Summary of Lying and Deceit Behaviors
Jason Voss, CFA, provides a summary of the major research about lying and deceit behaviors, including a brief overview of dozens of research papers.
2. Book Review: Financial Statement Analysis: A Practitioner’s Guide
This entertaining book persuasively argues that it is both naive and dangerous for practitioners to accept financial reports at face value. Using both real-world examples and hypothetical scenarios, the authors demonstrate that in the “real world,” financial statements often conceal as much as they reveal.
Today’s historically low interest rates and investors’ flight to safety have combined to raise interest in dividend-paying stocks. And while studies of the efficacy of dividend-investing strategies have been mixed, dividend investing remains a popular strategy. As such, it only seems appropriate to revisit an investing classic that first provided investors with a theoretical framework for determining the intrinsic value of stocks based on their dividends: John Burr Williams’s The Theory of Investment Value.
4. Silver Medal or Bronze? Understanding Pride, Regret, and Counterfactual Thinking
Due to a phenomenon known as counterfactual thinking, silver medalists are often less happy than Olympians who capture the bronze. Studies show that counterfactual thinking can also influence how finance professionals pick stocks.
5. Manchester United IPO: Yellow Card
Manchester United, the acclaimed soccer club of the English Premier League, is planning to sell shares to the public in an offering to be priced August 9, 2012. While its iconic brand and loyal following are probably unsurpassed in professional sports, the valuation attached to Manchester United’s shares and the risk factors associated with ownership make this an investment to avoid, unless you are just looking for bragging rights at your local pub.
