Monthly Archives

July 2015

Research in Focus: Mean Reversion in Dimensions of Stock Returns

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Research in the world’s financial markets has documented the existence of equity, size, value, and profitability premiums in the historical sample of stock returns. Since these premiums have been persistent across long time periods and pervasive across various markets, they are sometimes called dimensions of expected stock returns. This variation naturally leads some to wonder if the expected values of these premiums are constant over time. Can investors predict when to buy and sell securities? In this short video Jim Davis, PhD, runs more than 780 tests on data from 15 stock markets to test this theory.

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Three Key Investment Strategies Hidden in Plain Sight – Plain Sight Strategy #1: Being There

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If you’ve ever dabbled in graphic design, you’re familiar with the concept of white space. When viewing an illustration, we typically pay the most attention to the visible ink on the page, such as a paragraph of text, a bar chart or an entertaining illustration. White space is the essential empty areas in between that are hidden in plain sight. We barely notice them … until they’re not there. When making investment decisions, most people likewise assume that the most eye-catching ink matters the most: an alarming economic forecast, an exciting Initial Public Offering, hot trading tips. But there’s a catch. This evident assumption does not hold up under evidence-based scrutiny.

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The Financial Crisis in Greece

By | Investment Consulting | No Comments

The situation in Greece has gotten a fair amount of attention in recent news. While a tentative agreement with the EU has been reached, the heightened level of uncertainty is the exact kind of market risk we expect as investors, whether we like it or not. It is the kind of risk that drives future expected market returns. In this short video, Weston Wellington of Dimensional offers useful perspectives on the financial crisis in Greece and how investors should consider reacting.

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