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Trending: Top 3 California Municipal Bond Funds
Justin Kuepper
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Municipal bonds have been a safe haven within fixed income markets that have...
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Academic research has sought to provide explanations for this anomalous behavior (meaning that it’s irrational from an economic perspective). One explanation is that individuals are searching for a cheap bet, as with lottery tickets, and thus find lower-priced stocks attractive. Another is that investors may perceive low-priced stocks as being closer to zero and farther from infinity. Thus, they have more upside potential and less to lose (of course, no matter how low the price is, you can always lose 100 percent of the investment). As evidence that Wall Street is well aware of investor preferences, there are even mutual funds that try to appeal to (or exploit) this behavioral anomaly by including the term “low-priced” in their names — such as the Fidelity Low-Priced Stock Fund (FLPSX) and the Royce Low Priced Stock Fund (RYLPX).
The following is a summary of their findings:
The authors concluded: “Overall, the evidence is consistent with investors suffering from a nominal price illusion in which they tend to overestimate the ‘cheapness’ or ‘room to grow’ of low-priced stocks relative to high-priced stocks.” They also concluded: “Investors exhibit greater optimism toward low-priced stocks than high-priced stocks.”
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News
Justin Kuepper
|
Municipal bonds have been a safe haven within fixed income markets that have...
Kristan Wojnar, RCC™
|
We are exploring the topics of virtual nonverbal communication, getting your blogs to...
Justin Kuepper
|
Let’s take a look at a few key pieces of advice to stop...
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
|
While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...
Academic research has sought to provide explanations for this anomalous behavior (meaning that it’s irrational from an economic perspective). One explanation is that individuals are searching for a cheap bet, as with lottery tickets, and thus find lower-priced stocks attractive. Another is that investors may perceive low-priced stocks as being closer to zero and farther from infinity. Thus, they have more upside potential and less to lose (of course, no matter how low the price is, you can always lose 100 percent of the investment). As evidence that Wall Street is well aware of investor preferences, there are even mutual funds that try to appeal to (or exploit) this behavioral anomaly by including the term “low-priced” in their names — such as the Fidelity Low-Priced Stock Fund (FLPSX) and the Royce Low Priced Stock Fund (RYLPX).
The following is a summary of their findings:
The authors concluded: “Overall, the evidence is consistent with investors suffering from a nominal price illusion in which they tend to overestimate the ‘cheapness’ or ‘room to grow’ of low-priced stocks relative to high-priced stocks.” They also concluded: “Investors exhibit greater optimism toward low-priced stocks than high-priced stocks.”
Receive email updates about best performers, news, CE accredited webcasts and more.
News
Justin Kuepper
|
Municipal bonds have been a safe haven within fixed income markets that have...
Kristan Wojnar, RCC™
|
We are exploring the topics of virtual nonverbal communication, getting your blogs to...
Justin Kuepper
|
Let’s take a look at a few key pieces of advice to stop...
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Download our free report
Find out why $30 trillon is invested in mutual funds.
Mutual Fund Education
Justin Kuepper
|
Let's take a closer look at how ESG investments have outperformed during the...
Mutual Fund Education
Daniel Cross
|
While CITs and mutual funds share many similarities, there are some key differences...
Mutual Fund Education
Sam Bourgi
|
The phrase ‘bear market’ has been thrown around a lot lately, but it...