We show that reaching for yield---a tendency to take more risk when the real interest rate declines while the risk premium remains constant---results from imposing a sustainable spending constraint on an otherwise standard infinitely lived investor with power utility. When the interest rate is...

Using a sample that post-dates important regulatory changes in Europe, we show that a buy recommendation from an analyst on a “consensus sell” stock is, on average, sufficient to cause the stock to start to rise in value. Similarly, a sell recommendation on a “consensus buy” stock can...

Stock characteristics have two sources of predictive power. First, a characteristic might be valuable in identifying high or low expected returns across industries. Second, a characteristic might be useful in identifying individual stock expected returns within an industry. Past studies...

Despite a considerable premium on equity with respect to risk free assets, many households do not own stocks. We ask why the prevalence of stockholding is so limited. We focus on individuals' attitudes towards risk and identify relevant factors that affect the willingness to take financial...

This paper investigates the efficiency of household investment decisions in a unique dataset containing the disaggregated wealth and income of the entire population of Sweden. The analysis focuses on two main sources of inefficiency in the financial portfolio: underdiversification of risky...