Tale Of 2 Stock Markets

Are your politics affecting your investment results?

The fourth quarter of 2018 was a pretty miserable one for investors, with the S&P 500 Index losing 13.5%. And it was looking a lot worse on Christmas, although the index rallied 6.8% in the last week of the year. So how were investors thinking about the market in January? The answer depended on whether you were a Republican or a Democrat! > SEE MORE

Investor Biases & Mutual Funds

The relationship between investment flows and mutual fund performance is of great interest. For example, do investors naively look only at raw returns when making asset allocation decisions, or do they adjust returns for risk, using an asset pricing model?

Mutual Fund Investor Concerns

Itzhak Ben-David, Jiacui Li, Andrea Rossi and Yang Song, authors of the October 2018 study “What Do Mutual Fund Investors Really Care About?”, sought to determine whether investors use prominent asset pricing models—such as the CAPM (capital asset pricing model) and the three- and four-factor versions of Fama-French models—to allocate capital, or whether Morningstar’s star ratings (which do not account for systematic exposure to explanatory factors) explain mutual fund flows better than risk-adjusted returns. > SEE MORE