The role of investor sentiment in the stock market has attracted attentions of many economists. Previous papers show that investor sentiment has return predictability and it is more pronounced among stocks that are more difficult to value and/or to arbitrage, and emphasize the behavioral role of...

Simulation models of the stock exchange are developed to explore the dependence between a trader's ability to predict future price movements and her wealth and probability of bankruptcy, to analyze the consequences of margin trading with different leverage rates and to compare different...

According to FLIEM model predictions, before the crisis, during the crisis and just after the crisis phases should be connected with higher levels of cash investments. Investments in financial liquidity of the businesses are done as hedging method against higher risk sensitivity. That is done by...

Investments in financial liquidity of the firm are done thru investing money in current assets. The goal of the paper is to find if efficiency measure ROA is linked with current ratio, liquidity ratio and collection period. Paper presents a classification of financial consequences of managerial...

Price charts are pervasively used in today's security analysis. In this paper, we argue that where there is a chart, there is more or less an intuitive chartist whose forecasts are partly based on his or her chart intuition. Asking subjects to forecast simulated stock price series, we find...

We develop and test a simple hedging theory of prediction interval formation. In the presence of uncertainty, forecasters hedge their forecasts by adjusting the prediction interval based on their own (first-order) belief in a way that reflects their (second-order) belief about others' beliefs....

We provide novel evidence supporting the view that stock prices of some firms in the early growth stage of their life cycle are set by optimistic investors fixated on sales growth. We identify these firms as those that went public during an industry IPO waves, had high sales growths but low...

A sound policy for spending wealth over time is as important as a sensible investment policy. It's a complex problem for taxable individuals with finite, uncertain longevity. A good start is thinking about the simpler problem of how one would spend if immortal. This is exactly the real problem...

It’s easy to overlook the fact that, in thinking about investment risk, we are implicitly making a choice about the benchmark against which risk is measured. It’s a convention, which we often take for granted, to use our local hard currency as the risk-less benchmark – but this choice,...

Scott Fawcett’s “Decade” system of golf decision-making is revolutionizing golf strategy. In this note, we describe its broad outlines and provide an illustrative case study. We also discuss some of the valuable lessons that equally pertain to sound investing as well. At the center of...