Journal to portfolio afterlife (8 lettori)

portfolioafterlife

too fast for love
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portfolioafterlife

too fast for love
Research (see here, here and here) has shown that investor sentiment (emotions) plays a significant role in international market volatility and generates return predictability of a form consistent with the correction of investor overreaction; and total sentiment is a contrarian predictor of country-level market returns, as high investor sentiment predicts low future returns and vice versa.

The research demonstrates that investor sentiment (emotions) not only plays a significant role in market volatility and generates return predictability of a form consistent with the correction of investor overreaction but also is a contrarian predictor of future returns. This is particularly true for stocks of companies that are younger, smaller, more volatile, unprofitable, non-dividend paying and distressed. Thus, investors are best served by having a well-though-out investment plan, including an asset allocation table that is adhered to (rebalancing along the way). Having and adhering to such a plan provides the greatest chance of not allowing emotions to impact decisions. Forewarned is forearmed.

 

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Alto