That's Interesting
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Not even the machines are rational
11th September, 2023For 50 years, behavioural economics has thrown the gauntlet at the rational expectation hypothesis and the concept of homo economicus. But now, rationality could fight back. AI and machine learning algorithms have become so powerful that their forecasts can compete with analyst forecasts (at least before transaction costs) and these algorithms certainly aren’t biased like humans are. Or are they?
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Revealed Beliefs about Responsible Investing: Evidence from Mutual Fund Managers
30th August, 2023What do asset managers — a group of presumably sophisticated investors — believe regarding the financial performance of Environmental, Social, and Governance (ESG) investment strategies? This article addresses this question by exploring the relationship between US mutual fund managers’ incentives to deliver high returns and their portfolio ESG performance.
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Speed and Expertise in Stock Picking: Older, Slower, and Wiser?
31st July, 2023There are significant differences among sell-side analysts in how frequently they revise recommendations. This article shows that much of this variation is an analyst-individual trait, with analysts who change recommendations more slowly make recommendations that are more influential and generate better portfolio returns.
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Bloated Disclosures: Can ChatGPT Help Investors Process Financial Information?
27th July, 2023Generative AI tools such as ChatGPT can fundamentally change the way investors process information. A probe into the economic usefulness of these tools in summarizing complex corporate disclosures using the stock market as a laboratory, shows that unconstrained summaries are dramatically shorter, often by more than 70% compared to the originals, whereas their information content is amplified.
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Cold Water Swimming – Benefits and Risks
06th March, 2023Cold water swimming – also known as winter swimming or ice swimming – describes swimming outdoors (lake, river, sea, swimming pool, etc.) mainly during the winter or in the colder and polar regions. Although chronic exposure to colder water temperatures has been shown to be beneficial to one’s health, several studies have outlined the potential risks.
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The tamer the cow, the smaller the brain
14th December, 2022The first large-sale study of brain sizes across cattle breeds reveals that docile dairy and beef cows have smaller brains than aggressive bullfighting breeds
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The Real Magic of Rituals
08th December, 2022We might call them superstitions or spells, but they genuinely drum anxiety away.
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Learning by Consuming
08th December, 2022Mutual fund managers increase investment allocations to companies manufacturing automobiles they have purchased. This effect is stronger (weaker) when these customer-managers have positive (negative) consumption experiences, as measured by repeat purchases (positive), brand switches, and swift resale after purchase (negative).
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Sensation Seeking and Hedge Funds
08th December, 2022This article shows that, motivated by sensation seeking, hedge fund managers who own powerful sports cars take on more investment risk but do not deliver higher returns, resulting in lower Sharpe ratios, information ratios, and alphas. Moreover, sensation-seeking managers trade more frequently, actively, and unconventionally, and prefer lottery-like stocks.
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