Alfred Cowles' (1934) test of the Dow Theory apparently provided strong evidence against the ability of Wall Street's most famous chartist to forecast the stock market. In this paper, we review Cowles' evidence and find that it supports the contrary conclusion -- that the Dow Theory, as applied...

I analyze the behavior of a group of investment newsletters that provide explicit recommendations about the fractions of investment holding that should be allocated to risky and riskless asset classes. I find that the group of newsletters exhibit few types of simple behaviors and a majority of...

This study analyzes the behavior and performance of 353 investment newsletters that make asset allocation recommendations during a period covering more than 21 years (June 1980 - November 2001). Newsletters change their asset mix between equity and cash using relatively simple rules that are...

Using a novel dataset containing the forecasts of both buy-side and sell-side analysts, and individual investors, we find that crowdsourced earnings forecasts are more accurate than expert forecasts of sell-side analysts. Examining the economic mechanisms that generate superior crowd forecasts,...

This paper shows that the presence of security lending supply before an initial public offering (IPO) reduces the initial stock return following IPO and improves subsequent long-run performance. We use a sample of British firms that go public via a two-stage IPO procedure where a firm becomes...

The paper finds that firms' exposure to temperature changes predicts stock returns. We use the sensitivity of stock returns to abnormal temperature changes to measure firm-level climate sensitivity. Stocks with higher climate sensitivity forecast lower stock returns. A trading strategy that...

Firms that file for Chapter 11 are actively traded. This paper investigates who trades these bankrupt firms and why. We also examine the potential pricing impact of this active trading. We find that the unique lottery-like characteristics of bankrupt firms make them attractive to a particular...

This study shows that investor preference for positively skewed payoffs is a common driver of mispricing across a wide range of market anomalies. Specifically, skewness-loving investors overweight overpriced stocks in their portfolios and in doing so contribute to the anomalies. Using a combined...

We study the forecasting behavior of minority sell-side equity analysts. Distinct from the impact of cultural and geographic diversity, we demonstrate that, although minority analyst forecasts have lower accuracy, consistency in their forecasts generates stronger correlation between the...

This paper examines whether sell-side equity analysts use labor market information, as reflected in job postings and corporate layoffs, to improve the quality of their earnings forecasts. We posit that labor market activities contain useful incremental information about the related firm and the...