There’s no shortage of breathless takes about AI transforming finance. Most of them are wrong in obvious ways. But every once in a while, someone runs a real test instead of just tweeting about “disruption.” That’s what Sangheum Cho did in a recent working paper, “Can ChatGPT Generate Stock Tickets to Buy and Sell for […]

If you think spending hours reading stock message boards is making you a better investor, it probably isn’t. A field study out of South Korea (“Confirmation Bias, Overconfidence, and Investment Performance: Evidence from Stock Message Boards” by JaeHong Park, Prabhudev Konana, Bin Gu, Alok Kumar and Rajagopal Raghunathan) tracked 500 retail investors as they interacted […]

This could also be known as the “everyone else thinks your children are intolerable, while you think they are little angels” bias. People tend to emphasize the positive attributes in things that they already own and discount the bad things. For example, I have an old car that developed a backfire so bad that flames […]

One of the many things that make investing hard is that everything is dependent on context. What is good news in one period is bad news in another. A paper, “Real-Time Price Discovery in Global Stock, Bond and Foreign Exchange Markets” by Torben Andersen et al. looked at this effect as part of a larger […]

“Calendar anomalies” are the excess market returns that are tied to certain time of the year. Some examples are the January Effect, the Turn-of-the-Month effect, the Halloween Effect and the Moon-Phase effect. Calendar effects are probably the easiest anomalies to trade as they require nothing more than an email alert or even an old-fashioned physical […]