Academia produces a steady outflow of studies on investing and personal finance topics. The math and jargon scares many people off, which is unfortunate because there are often some interesting ideas to consider, like the ones on index investing in this paper.
I have a quantitative background myself, so often go browsing through the journals and working papers to glean some new perspectives and insights. Below are some brief summaries of recent papers that I found of interest. I’m thinking about doing this on a regular basis, approximately every two weeks or so.
1. Ageing and Asset Prices, by Elod Takats, finds demographic factors have affected real house prices significantly. His model projects “ageing will lower real house prices substantially over the next forty years.”
2. Intermediated Investment Management, by Neal M. Stoughton, Youchang Wu
and Josef Zechner, looks at how financial advisors and the financial industry are impacted by trailer fees. A common interpretation is that these fees are payments for financial-planning services, but the authors find they are better understood as tools for aggressive marketing by portfolio managers (and for price discrimination).
3. Linking Self-Esteem with the Tendency to Engage in Financial Planning, by Florence Neymotin, discovers a strong positive link between self-esteem and an individual’s decision to engage in financial planning. Better self-esteem leads to better financial planning, it seems.
4. Diversification and its Discontents: Idiosyncratic and Entrepreneurial Risk in the Quest for Social Status, by Nikolai L. Roussanov, finds a link between social status needs and the share of risky assets in portfolios – those wanting to “get ahead of the Jones” tend to have higher concentrations in risky investments and encounter greater volatility.
5. Do Individual Investors Have Asymmetric Information Based on Work Experience? by Trond M. Døskeland and Hans K. Hvide, examines the tendency of investors to overweight stocks in the industry they work in (11% in the case of Norwegian investors). Finding these holdings (shares in employer were excluded) underperformed the market, the authors conclude that the ill-advised concentration of risk across human-capital and financial assets does not reflect an information edge but overconfidence.
By: Larry MacDonald, From Canadian Business Online Blog
www.saveriomanzo.com
Saverio Manzo
Source: Abby Joseph Cohen ‐ Goldman Sachs, Morgan Stanley, Michael Hartnett‐ Bank of America Merrill Lynch, RBC Capital, Donald Coxe ‐ Coxe Advisors, BMO Capital Markets , David Rosenberg ‐ Gluskin Sheff + Associates, Barry Ritholtz - The Big Picture, T. Rowe Price, Federated Investors, Brain Fabbri ‐ BNP Paribas, Sherry Cooper – BMO, Kurt Karl ‐ Swiss RE, Investment Postcards, Barry Ritholtz, Peter Grandich, Nouriel Roubini, Marc Faber, Bill Gross ‐ PIMCO, Barton Riggs, Eric Sprott – Sprott Capital, Jeremy Siegel, Steven Leuthold, Jeremy Grantham; Merrill Lynch Fund Managers Survey, Gordon Pape,
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