11 January 2018 - stock analysts

Amateur stock traders listen to the public claims of stock analysts and believe them to an extent. Professional traders know better and rely on their own efforts. New research from the group of Nicola Gennaioli claims that neither strategy is correct: You should listen to analysts and do the exact opposite; if you invest in the stocks that analysts are least optimistic about, you can double your returns. But beware: By the miracle of financial markets, once you make a true claim about a way to profit, it ceases to be true because arbitrageurs jump in and take advantage. Every time you find ignorant people, the market intervenes and makes them as knowledgeable as everybody else.