New research released this month gives impetus to the evidence that newspaper articles can predict aggregate future stock returns.
Conducted by Professor of Finance at the University of St Gallen in Switzerland, Manuel Ammann, it examines articles in the German finance paper, Handeslblatt, from July 1989 until March 2011, and overall found that “newspaper content is a valuable predictor for future DAX returns”.
While, typically, economic and financial data dominates the research of economists and analysts looking at future stock returns, the predictive power of newspaper articles can now join the fray.
While this research should be reason enough for you to want to read top1000funds.com, we’re also embarking on change in order to make your reading life easier.
This newsletter marks a new phase in our development – which includes not only new design but also new frequency in our delivery – as we endeavour to deliver in-depth industry analysis in a timely fashion. We will now send a newsletter to your inbox twice a week.
The research by the St Gallen academics has also given me cause to think about the influence and power of media, and how top1000funds.com can challenge its readership but also work with it to influence policy, investment practice and thinking for the greater good.
There have been other qualitative measures that look at the influence of newspaper articles including the The Economist’s informal R-word index which looks at the number of times the Wall Street Journal and The New York Times use the word “recession” in a quarter.
It claims that previous incarnations of the index identified the start of US recessions in 1990, 2001 and 2007.
There is also the “MarketPsych Fear Index” which is a 10-day exponential moving average of the percentage of “fear” words in the US financial news. The company that produces it also now publishes the “MarketPsych Fear Gauge” which is a real-time display of the fear expressed in financial social media.
Perhaps we can develop our own research measuring the influence of our work on this industry.
Certainly top1000funds.com aims to challenge “best practice”, industry norms, conventional thinking and methods of investment. We want to bring you information that is otherwise difficult to access, from your peers, industry observers and academics, looking sideways at the issues and the patterns of change.
As always we welcome your ideas, feedback and referrals. Let’s talk.