Andrei Shleifer NBER Working Paper No. 18686 January 2013 JEL No. G02‚G12‚G14 ABSTRACT We analyze time-series of investor expectations of future stock market returns from six data sources between 1963 and 2011. The six measures of expectations are highly positively correlated with each other‚ as well as with past stock returns and with the level of the stock market. However‚ investor expectations are strongly negatively correlated with model-based expected returns. We reconcile the evidence by calibrating
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Jack Blanding Professor Jevons Lee May 18‚ 2012 ACCN 7200-21 Effective Investing: Barons that Beat the Market Introduction The most pertinent question to modern investors is whether it is possible to predict prices and attain arbitrage. Since the time when academics first entered the field of financial investing after World War II‚ the developments in the stock market have encircled this central question. There have of course been developments on both sides‚ as men like Alfred Cowles and Eugene
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stock prices. One could see a shift with the changing demographic profile of the Indian population‚ with new products being launched (for example‚ products being linked to pensions)‚ coupled with financial awareness and literacy initiatives for investors both by the industry and the regulator‚ and with the onus of expanding the market falling on the distributors—the first
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theory assumes that investors are rational in practive‚ few if any investors appear to approach investments decisions in a rational manner. Can Noise Traders Survive? 1. Introduction Noise Trader is a financial term introduced by Kyle (1985) and Black (1986). It refers to a stock trader who lacks access to inside information and makes irrational investment decisions (De Long et al.‚ 1990). Traditional financial theories are often based on the assumption that all the investors are rational. The
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speech‚ Mr Right presented that the market was efficient in the semi-strong form as investors had no benefit in the disclosure of enterprises financial reports‚ due to the information included in those reports was the past information with share prices. Therefore‚ the usefulness of financial reporting to share purchasers and sellers was invalid during their decision making‚ so there were unnecessary for an investor to study financial reports and accounts of companies. I. Capital Market Efficiency
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order to maintain this continued growth in the coming years‚ these companies are both in need of investors who will fund their efforts. Comparison of Current Assets and Current Liabilities Investors and potential investors in these companies will look at and consider a multitude of information before deciding which of these two companies would be a better investment. For instance‚ most investors will look at each company’s current assets and liabilities amounts. In 2004‚ Coca-Cola had more
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private market restricted to accredited investors; the top tier would be a public market with unlimited access. The transition between the two markets would be based on issuer choice and market capitalization‚ followed by a seasoning period of disclosure and trading in the public market before the issuer would be allowed to make a public offering. I argue that such system would promote not only efficient capital formation‚ but also investor protection. I. Introduction
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started to form as early as the mid 1800s and helped small investors to diversify their risk through pooled investment (Bengassa‚ 1999). Not long thereafter‚ institutional investors also began to participate in investment trusts. The main benefit provided by investment trusts is diversification and the access to managerial skills (Bengassa‚ 1999). Investment trusts are closed-ended funds that issue a finite number of shares and investors cannot come and go as in open-ended funds (Clarke‚ 2012). These
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there is only one risk-free rate in the model‚ investors can borrow and lend unlimited amounts under the risk rate of interest; the perfect information is freely available to all investors who‚ as a result‚ have the same expectations; that all investors are risk averse‚ rational and desire to maximise their own utility; and the capital market is characterised by perfect competition‚ there are broadly diversified across a range of investments and the investors will only require a return for the systematic
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Uncertainty 7.1 Investor preferences and expected utility -If there is no uncertainty then we just need to determine how much we want to consume now and how much later i.e. assets are risk free with return certain across all states of the world -A risky asset is one whose cash flows are not certain across all possible states of the world. In finance it is commonly assumed that investors are risk averse‚ rational and have unlimited demand for wealth (nonsatiated) -This means investors dislike variance
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