Practical analysis for investment professionals

stocks


Historical Perspective: How Today’s US Stock Market Stacks Up against Past Bull Markets

As the bull market for US stocks approaches its fifth anniversary, we are starting to see signs typically associated with the latter stages of a multi-year advance in equities. Bearish sentiment, widely seen as a contrarian indicator, has dropped to levels not seen in a generation, retail investors are returning to stocks, and the IPO market has been surging. As further evidence, in the name of innovation, Wall Street is once again rolling out risky products that are almost certain to disappoint the unwitting buyer.

Stocks, Bonds, and the Fed’s Taper Talk

Consensus wisdom seems to be that rising interest rates are bad for stock prices.

Detecting Earnings Manipulation and Fraud: A Light Tutorial on Probit Analysis

Lies, damned lies, and earnings management. If 20% of firms misrepresent economic reality through earnings management, analysts and portfolio managers must protect themselves by knowing how, why, and when individuals lie. Quantitative methods with forensic formulas, such as the Beneish model, offer part of the necessary skills to distinguish earnings manipulation from earnings management.

Poll: What Poses the Greatest Threat to Global Equity Markets?

As most global stock markets have been on a tear of late, we thought it would be timely to ask readers what posed the greatest threat to equity markets. Over 37% of the 974 respondents to this poll believe that a global economic slowdown is the greatest risk to stocks.

The Competing Incentives and Pressures that Influence Sell-Side Analysts

A recent study designed to decipher the “black box” of sell-side analyst decision making sheds new light on the driving forces behind two important outputs of their work: earnings estimates and stock recommendations.

Can You Time the Markets Based on the Presidential Cycle? (Podcast)

Rodney N. Sullivan, CFA, editor of the Financial Analysts Journal, cautions investors against trying to time the market against presidential cycles.

13F Watch: Bullish on Consumer Staples and Health Care Stocks, Bearish on Technology and Energy

Based on a review of the aggregate filings for the second quarter of 2012, institutional investors added to their holdings in consumer staples and health care stocks while reducing their exposure to the technology and energy sectors.

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.



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