Stock Market Theory and Practice.

1931 ◽  
Vol 26 (175) ◽  
pp. 368
Author(s):  
Spurgeon Bell ◽  
Richard W. Schabacker
Keyword(s):  
Stock Market ◽  
Theory And Practice ◽  
Market Theory

scholarly journals Profitability of investment strategies developed on the basis of buy and sell recommendations

2021 ◽  
Vol 43 ◽  
pp. 317-338
Author(s):  
Paweł Wnuczak ◽  
Keyword(s):  
Stock Market ◽  
Capital Market ◽  
Stock Exchange ◽  
Investment Strategy ◽  
Jel Classification ◽  
Theory And Practice ◽  
Investment Strategies ◽  
Market Theory ◽  
Rates Of Return ◽  
Long Run

Aim/purpose – The paper has two objectives. The first is to examine the profitability of applying investment strategies based on “buy” and “sell” recommendations issued by stock market analysts. The second objective is to validate that analysts who issue a rec- ommendation may not be impartial (not supporting any of the sides involved in an argu- ment) because the largest group of recommendations issued is “buy” recommendations. Design/methodology/approach – This study was conducted based on all the “buy” and “sell” recommendations issued during the period between January 1, 2004 and Decem- ber 31, 2016 for companies listed on the Warsaw Stock Exchange, using data from www.bankier.pl. The annual forecast rates of return were determined for all the recom- mendations included in the survey. The expected rates of return were determined for each recommendation based on the information collated from the Bloomberg database. The regression analysis enabled the exploration of the relationship between the actual rates of return and the rates of return predicted in recommendations. Findings – It was determined that investing on the basis of the information included in “sell” recommendations might make it possible to avoid unprofitable investments. At the same time, the study shows that an investment strategy compliant with “buy” recom- mendations does not let the investor achieve the expected rates of return on an invest- ment in the capital market in the long term. Research implications/limitations – The conducted research could be an important source of information for stock market investors’ decision-making regarding investments Originality/value/contribution – Despite the topic of recommendation effectiveness being very important from the perspective of capital market theory and practice, it is still unclear whether investing based on information provided in stock market recommenda- tions can be a profitable strategy in the long run. The study offers a bridge to fill the existing research gap. Keywords: recommendations, stock exchange, investment. JEL Classification: G140

scholarly journals A New Momentum Strategy Based on Chinese Securities Market

2019 ◽  
Vol 14 (12) ◽  
pp. 90
Author(s):  
Jin Zhang ◽  
Yuxiu Zhang ◽  
Yongqi Dong
Keyword(s):  
Stock Market ◽  
Stock Price ◽  
Market Price ◽  
Abnormal Returns ◽  
Theory And Practice ◽  
Securities Market ◽  
Momentum Effect ◽  
Short Term ◽  
Market Theory ◽  
Momentum Strategy

Facing the current gaps with regard to the momentum effect in Chinese securities market, a momentum strategy was constructed to compare the securities market price under the effective market theory with under the non-effective market theory by the Hushen 300 index from 2006 to 2015 and a stock price residual measurement model. An important result was that the root cause of the momentum effect was systematic irrational behavior. On this basis, a new momentum strategy was constructed based on RSP (Residual of Stock Price), and the performance of that strategy was tested in different ranking and holding periods. The new momentum strategies were obtained positive average cumulative abnormal returns in the super short-term, short term and medium term. This finding confirmed the significant existence of the momentum effect in China’s stock market and the validity of the RSP momentum strategy. Therefore, this finding can be contributed to effectively addressed the current gaps and examine the applicability of classic asset pricing theory and behavioral finance theory in China's stock market. Finally, after considering the transaction costs, the momentum strategy is effective in both theory and practice.

Mindtree: Tryst with the Corporate Control Market

2021 ◽  
pp. 227797792199190
Author(s):  
P. Bala Bhaskaran
Keyword(s):  
Capital Market ◽  
Corporate Control ◽  
Theory And Practice ◽  
Effective Control ◽  
Small Fish ◽  
Market Theory ◽  
Strategic Fit ◽  
Sequence Of Events ◽  
The Capital Market

The case is structured around the takeover of Mindtree Ltd (ML) by Larsen & Toubro Ltd (L&T) in June 2019. ML was founded and nurtured by a group of software professionals. In two decades, it had blossomed into an enterprise with global presence, US$ 1 billion turnover and a unique organizational culture. In a strange sequence of events, more than 20% of ML’s shares landed in L&T’s lap. L&T grabbed this opportunity and ran a systematic campaign to acquire the company. In about 100 days, L&T achieved its objective and got into the driver’s seat. The case traces the evolution of ML from a start-up to a publicly held company with global standing. It examines the circumstances and events leading to L&T getting the initial stake in the company; it examines the acquisition campaign of L&T and the response of the top management of ML. Research Questions Was there a strategic fit between ML and L&T? Were the capital market processes just and fair to all the stakeholders involved in the acquisition? Was L&T fair, prudent and sensitive in the acquisition process? Was Siddhartha loyal and fair to the founders of ML? Link to Theory The theoretical concepts that would enable a better comprehension of the case are: Analysis of strategic fit in M&A situations Capital market: Theory and practice Strategy for corporate control of an enterprise Significance of culture and ecosystem in knowledge organizations Phenomenon Studied Leadership styles relevant at different stages of evolution of an enterprise are different. A leader, at a given point of time, is successful when he is able to match his aspirations with the leadership needs of the enterprise at that point of time. The case can be used to demonstrate this phenomenon. Case Context Context of the case is that of an emerging infotech enterprise, coming under corporate raid and the unfolding capital market processes. The case highlights the shortcomings of the co-founders, leading to their unseating as also the sensitivity of the incoming management in handling the transition. Findings The case demonstrates the ability of the capital market to be fair to all stakeholders ensuring reward for competence and punishment for sloppiness. The case emphasizes the need for co-founders to have an effective strategy for corporate control; only then they could hope to achieve the long-term objectives. The case also illustrates the significance of sensitivity in handling softer issues like people and ecosystem in ensuring long-term success. Discussions At the outset, the case may appear to be that of a big fish swallowing a small fish. But a closer scrutiny would reveal the multiple dimensions of the case. Consider the role of Siddhartha. He seeded the idea of the company; he was a financier to it; he remained an investor in the company longer than most of the founders; when he pulled out, the co-founders could not hold the company together. Neither Siddhartha nor the co-founders had the far-sightedness to consolidate their shareholdings for effective control of the company into the future. This would trigger discussions on the differing roles of technocrats, managers, leaders and founders. Another point worthy of discussion would be: How were the co-founders choosing their leaders? Was it by rotation among themselves, or did they engage a set of criteria to identify an incumbent capable of leading a global company?

scholarly journals Capital Asset Pricing Model, Theory and Practice: Evidence from USA (2009-2016)

2017 ◽  
Vol 12 (8) ◽  
pp. 182 ◽  
Author(s):  
Mohammad AbdelMohsen Al-Afeef
Keyword(s):  
Stock Market ◽  
Multiple Regression Model ◽  
Theory And Practice ◽  
Pricing Model ◽  
Stock Market Index ◽  
Market Return ◽  
Market Index ◽  
Stock Market Return ◽  
The Us ◽  
The Impact

This study discussed the Capital Assets Pricing model (CAPM) and its ability to measure the required return, the researcher tested this model on Amazon Company listed in S&P 500 during the period (2009-2016), to measure the impact of beta stock and market index return on the required return. Multiple regression model was used to test the effect of independent variables (Beta stock, Market Index Return) on the dependent variable (Required return), it should be noted that there is a statistically significant impact of the US stock market Return (S&P500) and Amazon stock Beta factor on Amazon stock required return, and the study model explanatory was 20% , this means that 20% of the changes in the required return are due to beta and market return, and 80% of the changes due to other factors, also find that CAPM can be applied on efficiency markets and huge companies.The researcher recommends applying the variables of the study on a group of large companies in the S&P 500 index, and looking for other factors that may affect the required return.

scholarly journals Investment and Construction Projects Management by Monitoring the Ecological State of Urban Space

2021 ◽  
Vol 263 ◽  
pp. 05033
Author(s):  
Alexandr Orlov ◽  
Irina Chubarkina
Keyword(s):  
Urban Space ◽  
Construction Projects ◽  
Continuous Process ◽  
Development Project ◽  
Environmental Risks ◽  
Theory And Practice ◽  
Market Theory ◽  
Cultural Aspects ◽  
Project Risks ◽  
The Impact

The authors carried out the analysis of the current state of the Russian investment and construction market, theory and practice of project analysis, which made it possible to determine the specifics of housing construction projects development during the crisis and highly uncertain external and internal factors of its implementation. Urban agglomerations development is a continuous process of transformation of the existing urban environment, where daily living activities are carried out, connected with changing social requirements. It includes various components of the integrated organization of the city’s space: ecological, functional, architectural and artistic, socio-cultural aspects, as well as the organization of population activities. At the same time, taking into account the peculiarities of the city as a whole, urban development, in particular, is today the dominant task in urban planning practice. The mechanism of indicative risk assessment was used to develop the author’s matrix for the processing of specific project risks during the crisis. Values of factor risk premiums are based on it, and they are taken into account when calculating the project efficiency. The use of this methodology makes it possible to identify and assess project risks with minimum resources, correct the parameters of the project’s commercial efficiency and, taking into account the results obtained, draw a conclusion about the feasibility of further project implementation. One should choose a certain classification of environmental risks focusing on the goals and objectives of projects. This allows choosing the right methodology for assessing environmental risks at the stage of information collection and analysis, which in the future will make it possible to make the most complete and balanced decision. The use of the proposed recommendations makes it possible to take into account the impact of commercial, financial, legal, production and management risks during the crisis and, as a result, more accurately calculate the commercial efficiency of a development project.

scholarly journals Chronotype, Risk and Time Preferences, and Financial Behaviours

2018 ◽  
Author(s):  
Di Wang ◽  
Frank McGroarty ◽  
Eng-Tuck Cheah
Keyword(s):  
Stock Market ◽  
Credit Card ◽  
Financial Risk ◽  
Online Survey ◽  
Mainland China ◽  
Risk Preference ◽  
Theory And Practice ◽  
Market Participation ◽  
Stock Market Participation ◽  
Circadian Typology

This paper examines the effect of chronotype on the delinquent credit card payments and stock market participation through preference channels. Using an online survey of 455 individuals who have been working for 3 to 8 years in companies in mainland China, the results reveal that morningness is negatively associated with delinquent credit card payments. Morningness also indirectly predicts delinquent credit card payments through time preference, but this relationship only exists when individuals’ monthly income is at low and average level. On the other hand, financial risk preference accounts for the effect of morningness on stock market participation. Consequently, an additional finding is that morningness is positively associated with financial risk preference, which contradicts previous finding in the literature. Finally, based on the empirical evidence, we discuss the plausible mechanisms that may drive these relationships and the implications for theory and practice. The current study contributes to the literature by examining the links between circadian typology and particular financial behaviours of experienced workers.

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