scholarly journals AN ARGUMENT AGAINST STOCK-PICKING AND MARKET-TIMING: AN EMPIRICAL APPROACH

2021 ◽  
Vol 20 (2) ◽  
Author(s):  
Enrique Rafael González Pozo
Keyword(s):  
Potential Benefit ◽  
Investment Strategy ◽  
Active Management ◽  
Management Approach ◽  
Wall Street ◽  
Difficult Time ◽  
Money Managers ◽  
The Cost ◽  
Stock Picking ◽  
Economic Outlook

This paper’s objective is to demystify the world of investing, first by showing and exposing the results the greatest money managers in the Wall Street have obtained over the last years compared to the performance of their benchmark indexes. Index investing represents a passive investment strategy of holding hundreds of stocks instead of the active management approach used by these experts. After exposing said results, a theoretical framework will be presented that explains why money managers have such a difficult time outperforming their benchmark indexes. Later on, a back-test experiment will be presented and thoroughly explained showing five different hypothetical investment scenarios over several 20-year periods with the attempt to quantify the potential benefit of perfectly timing the market and compare it to the cost of waiting for a better time to invest. The results find shows that the cost of waiting is much greater that the potential benefit of perfectly timing the market and the best alternative would be to invest available cash immediately regardless of market or economic outlook.

scholarly journals Effects of thermal conditioning on the performance of Pocillopora acuta adult coral colonies and their offspring

Coral Reefs ◽  
2021 ◽  
Author(s):  
Crystal J. McRae ◽  
Wen-Bin Huang ◽  
Tung-Yung Fan ◽  
Isabelle M. Côté
Keyword(s):  
Nuclear Power ◽  
Direct Evidence ◽  
Lunar Cycle ◽  
Ocean Warming ◽  
Active Management ◽  
Management Approach ◽  
Offspring Performance ◽  
Lower Maximum ◽  
Management Techniques ◽  
Reproductive Cycles

AbstractOcean warming induced by climate change is the greatest threat to the persistence of coral reefs globally. Given the current rate of ocean warming, there may not be sufficient time for natural acclimation or adaptation by corals. This urgency has led to the exploration of active management techniques aimed at enhancing thermal tolerance in corals. Here, we test the capacity for transgenerational acclimation in the reef-building coral Pocillopora acuta as a means of increasing offspring performance in warmer waters. We exposed coral colonies from a reef influenced by intermittent upwelling and constant warm-water effluent from a nuclear power plant to temperatures that matched (26 °C) or exceeded (29.5 °C) season-specific mean temperatures for three reproductive cycles; offspring were allowed to settle and grow at both temperatures. Heated colonies reproduced significantly earlier in the lunar cycle and produced fewer and smaller planulae. Recruitment was lower at the heated recruitment temperature regardless of parent treatment. Recruit survival did not differ based on parent or recruitment temperature. Recruits from heated parents were smaller and had lower maximum quantum yield (Fv/Fm), a measurement of symbiont photochemical performance. We found no direct evidence that thermal conditioning of adult P. acuta corals improves offspring performance in warmer water; however, chronic exposure of parent colonies to warmer temperatures at the source reef site may have limited transgenerational acclimation capacity. The extent to which coral response to this active management approach might vary across species and sites remains unclear and merits further investigation.

scholarly journals Modulation of sleep-courtship balance by nutritional status in Drosophila

2020 ◽  
Author(s):  
José M. Duhart ◽  
Victoria Baccini ◽  
Yanan Zhang ◽  
Daniel R. Machado ◽  
Kyunghee Koh
Keyword(s):  
Nutritional Status ◽  
Calcium Imaging ◽  
Dopaminergic Neurons ◽  
Potential Benefit ◽  
Sleep Loss ◽  
Female Partners ◽  
Sleep Drive ◽  
Protocerebral Bridge ◽  
The Cost ◽  
Nighttime Sleep

AbstractSleep is essential but incompatible with other behaviors, and thus sleep drive competes with other motivations. We previously showed Drosophila males balance sleep and courtship via octopaminergic neurons that act upstream of courtship-regulating P1 neurons (Machado et al., 2017). Here we show nutrition modulates the sleep-courtship balance and identify sleep-regulatory neurons downstream of P1 neurons. Yeast-deprived males exhibited attenuated female-induced nighttime sleep loss yet normal daytime courtship, which suggests male flies consider nutritional status in deciding whether the potential benefit of pursuing female partners outweighs the cost of losing sleep. Trans-synaptic tracing and calcium imaging identified dopaminergic neurons projecting to the protocerebral bridge (DA-PB) as postsynaptic partners of P1 neurons. Activation of DA-PB neurons led to reduced sleep in normally fed but not yeast-deprived males. Additional PB-projecting neurons regulated male sleep, suggesting several groups of PB-projecting neurons act downstream of P1 neurons to mediate nutritional modulation of the sleep-courtship balance.

Investment Strategies for Sourcing a New Technology in the Presence of a Mature Technology

2021 ◽  
Author(s):  
Wei Zhang ◽  
Hsiao-Hui Lee
Keyword(s):  
Operations Management ◽  
New Technologies ◽  
New Technology ◽  
Investment Strategy ◽  
Profit Sharing ◽  
Development Effort ◽  
Investment Strategies ◽  
Cost Shifting ◽  
The One ◽  
The Cost

To stay competitive, high-technology manufacturers not only frequently source new technologies from their suppliers, but also financially support the development of these new technologies into component products or production tools. We consider a manufacturer that can either source a new but immature technology from a financially constrained supplier, or source a mature technology from an existing supplier if and only if the development of the new technology fails. To support the new technology, the manufacturer can choose to inject capital in the form of an equity or loan. The investment strategy not only affects the new supplier’s development effort and the probability of technical success (PTS), but also affects the existing supplier’s effort to improve the mature technology, which presents the manufacturer with a trade-off. Following the debt financing literature, we find that a loan contract is associated with a cost-shifting effect and often leads to a higher PTS. However, because the manufacturer not only maintains an investment but also a procurement relationship with the new supplier, we find a profit-sharing effect associated with an equity investment, which does not exist in the traditional equity issuance literature. In particular, we show that the profit-sharing effect can dominate the cost-shifting effect and lead to a higher PTS when the new supplier’s technological capability is sufficiently high. Nonetheless, we also show that the strategy that derives a higher PTS does not necessarily generate a higher payoff for the manufacturer. On the one hand, a loan can be preferred even when it leads to a lower PTS because the cost-shifting effect allows the manufacturer to offer a sufficiently low procurement payment while maintaining a sufficiently high PTS. On the other hand, when the existing supplier is very capable of reducing its costs, a loan can over-incentivize the new supplier to exert excessive effort and backfire. This paper was accepted by Charles Corbett, operations management.

scholarly journals Salinity Management in the Murray–Darling Basin, Australia

Water ◽  
2020 ◽  
Vol 12 (6) ◽  
pp. 1829 ◽  
Author(s):  
Barry Hart ◽  
Glen Walker ◽  
Asitha Katupitiya ◽  
Jane Doolan
Keyword(s):  
Land Surface ◽  
Success Factors ◽  
Management Strategies ◽  
Active Management ◽  
Management Approach ◽  
Governance System ◽  
European Settlement ◽  
Murray Darling Basin ◽  
The Future ◽  
Salinity Management

The southern Murray–Darling Basin (MDB) is particularly vulnerable to salinity problems. Much of the Basin’s landscape and underlying groundwater is naturally saline with groundwater not being suitable for human or irrigation use. Since European settlement in the early 1800s, two actions—the clearance of deep-rooted native vegetation for dryland agriculture and the development of irrigation systems on the Riverine Plains and Mallee region—have resulted in more water now entering the groundwater systems, resulting in mobilization of the salt to the land surface and to rivers. While salinity has been a known issue since the 1960s, it was only in the mid-1980s that was recognized as one of the most significant environmental and economic challenges facing the MDB. Concerted and cooperative action since 1988 by the Commonwealth and Basin state governments under a salinity management approach implemented over the past 30 years has resulted in salinity now being largely under control, but still requiring on-going active management into the future. The approach has involved the development of three consecutive salinity strategies governing actions from 1988 to 2000, from 2001 to 2015, and the most recent from 2016 to 2030. The basis of the approach and all three strategies is an innovative, world-leading salinity management framework consisting of: An agreed salinity target; joint works and measures to reduce salt entering the rivers; and an agreed accountability and governance system consisting of a system of salinity credits to offset debits, a robust and agreed method to quantify the credits and debits, and a salinity register to keep track of credits and debits. This paper first provides background to the salinity issue in the MDB, then reviews the three salinity management strategies, the various actions that have been implemented through these strategies to control salinity, and the role of the recent Basin Plan in salinity management. We then discuss the future of salinity in the MDB given that climate change is forecast to lead to a hotter, drier and more variable climate (particularly more frequent droughts), and that increased salt loads to the River Murray are predicted to come from the lower reaches of the Mallee region. Finally, we identify the key success factors of the program.

CITS

2012 ◽  
Vol 6 (4) ◽  
pp. 94-116
Author(s):  
Marco Spruit ◽  
Wouter de Bruijn
Keyword(s):  
Identity Management ◽  
Control Measures ◽  
Management Approach ◽  
It Security ◽  
Security Measures ◽  
Network Access ◽  
Detection Systems ◽  
Qualitative Approaches ◽  
Doing Business ◽  
The Cost

Organizations know that investing in security measures is an important requirement for doing business. But how much should they invest and how should those investments be directed? Many organizations have turned to a risk management approach to identify the largest threats and the control measures that could help mitigate those threats. This research presents the Cost of IT Security (CITS) Framework to support analysis of the costs and benefits of those control measures. This analysis can be performed by using either quantification methods or by using a qualitative approach. Based on a study of five distinct security areas–Identity Management, Network Access Control, Intrusion Detection Systems, Business Continuity Management and Data Loss Prevention–nine cost factors are identified for IT security, and for only five of those nine a quantitative approach is feasible for the cost factor. This study finds that even though quantification methods are useful, organizations that wish to use those should do this together with more qualitative approaches in the decision-making process for security measures.

scholarly journals How efficient is the Johannesburg Stock Exchange really?

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
André Heymans ◽  
Leonard Santana
Keyword(s):  
Stock Exchange ◽  
Weak Form ◽  
Active Management ◽  
Sign Test ◽  
Management Approach ◽  
Ratio Test ◽  
Variance Ratio ◽  
Johannesburg Stock Exchange ◽  
Portfolio Managers ◽  
The Impact

Background: There are various studies that confirm the efficiency of the Johannesburg Stock Exchange (JSE), implying that there are no opportunities for active portfolio managers to earn excess returns over the long run.Aim: The aim of the research is to prove that the sub-indices on the JSE go through cycles of efficiency and inefficiency even though the JSE as a whole might be considered informationally efficient.Setting: Although the JSE as a whole can be considered to be weak-form efficient, portfolio managers are not bound to investing in large liquid stocks alone. Many aggressive funds allow managers to also allocate a portion of their portfolio to smaller stocks. This has implications when considering the efficiency of the stocks being selected.Methods: Given the impact efficiency has on portfolio selection, we test for the adaptive market hypothesis using a representative sample of stock indices by means of the automatic variance ratio test, the Chow–Denning joint variance ratio and the joint sign test on the JSE.Results: Our results confirm that some of the smaller, and in some instances younger, indices are not always as efficient as the all share index, thus allowing portfolio managers with an active management approach some opportunities to profit from informational inefficiencies in the market.Conclusion: The practice of active management by portfolio managers in the South African market seems to defy logic if one considers the fact that the JSE as a whole is at the very least weak-form efficient. By proving that some of the sub-indices that make up the all share index are inefficient most of the time, this article shows that the phenomenon of active portfolio managers is less of a surprise.

Current Hedge Fund Debates and Controversies

2017 ◽  
Author(s):  
Dianna C. Preece
Keyword(s):  
Insider Trading ◽  
Hedge Funds ◽  
Conflicts Of Interest ◽  
Hedge Fund ◽  
Securities And Exchange Commission ◽  
Active Management ◽  
Wall Street ◽  
Net Worth ◽  
Market Participants ◽  
Alternative Beta

The hedge fund industry has grown to nearly $3 trillion over the last 20 years. High-net-worth individuals and institutional investors expect high returns and low correlation with traditional asset classes in exchange for the fees paid. The standard fee structure is “2 and 20,” 2 percent of assets under management and 20 percent of profits, representing high fees for active management. Hedge funds are largely unregulated and somewhat mysterious. As a result, they are the subject of debates and controversies among market participants and policymakers alike. Debates focus on fee structures, alpha versus alternative beta, weakening returns, activist investors, and leverage. The Securities and Exchange Commission has targeted hedge fund misconduct and malfeasance, pursuing perpetrators of fraud, insider trading, and conflicts of interest in the industry. Several high-ranking Wall Street hedge fund executives have been charged with, and in some cases convicted of, breaking securities laws.

The Influence of Narratives on Negotiations and Resolution of the Upper Jordan River Conflict

2013 ◽  
Vol 18 (2) ◽  
pp. 293-322 ◽  
Author(s):  
Mark Zeitoun ◽  
Michael Talhami ◽  
Karim Eid-Sabbagh
Keyword(s):  
Water Security ◽  
Security Studies ◽  
Management Approach ◽  
Jordan River ◽  
Missed Opportunities ◽  
Environmental Narratives ◽  
Security Discourse ◽  
Starting Point ◽  
Colonial Archives ◽  
The Cost

Abstract This article tests the assertion that narratives constructed around international environmental issues serve to promote or reduce opportunities for their resolution. It does this by interpreting the influence of Lebanese and Israeli environmental narratives on resolution of and indirect negotiations over the Upper Jordan River conflict. Colonial archives, key informant interviews and academic and policy literature serve to identify and critically investigate the narratives. An official Lebanese narrative of adherence to international law is found to contradict the more popular nationalist narrative of Israeli ‘theft’ of the flows. An Israeli water security discourse is found to be built on earlier narratives that have long held water (and the Upper Jordan flows in particular) as both a physically scarce and strategic commodity necessary for continued existence of the Israeli state. Basic discourse, security studies and negotiation theory is developed to gauge the influence of the narratives during the 2002 informal negotiations over the Wazzani pumping station dispute. The more influential Israeli discourse is found to establish the starting point (no discussion on re-allocation of the flows) and process of the informal negotiations. The narratives are found to open or shut windows for resolution of the conflict, by politicizing or securitizing ideas about the flows, respectively. The conflict management approach favored by US and EU mediators is seen to align with the more dominant discourse, at the cost of enduring asymmetry and tensions, and missed opportunities for both resolution of the conflict and promotion of fair water-sharing norms.

Was Dodd-Frank Justified in Exempting Small Firms from Section 404b Compliance?

2012 ◽  
Vol 27 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Anthony D. Holder ◽  
Khondkar E. Karim ◽  
Ashok Robin
Keyword(s):  
Opportunity Cost ◽  
Small Firms ◽  
Reporting Quality ◽  
Wall Street ◽  
Significant Deterioration ◽  
Accrual Quality ◽  
Market Capitalization ◽  
Consumer Protection Act ◽  
Sarbanes Oxley ◽  
The Cost

SYNOPSIS: In recognition of the high cost of compliance with its Section 404b—Auditor Certification of Internal Controls—the Sarbanes-Oxley Act of 2002 (SOX) provided temporary exemption to small firms (called non-accelerated filers, typically with market capitalization of less than $75 million). This temporary exemption was later made permanent by the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010). Our study estimates the opportunity cost of this exemption, that is, the reporting quality gains that would have been achieved by non-accelerated filers if exemption were not granted. We do so by using a “difference in differences approach”: We compare the effect of SOX on the reporting quality of accelerated filers with the effect of SOX on non-accelerated filers (identifying the two groups using market capitalization thresholds). We measure reporting quality principally by using earnings management and accrual quality measures. We detect a significant deterioration in reporting quality for non-accelerated filers but not for accelerated filers. The result is invariant to whether we compare non-accelerated filers with all accelerated filers or only with small accelerated filers. Our findings suggest a significant opportunity cost for the exemption. Although the consideration of the cost of Section 404b compliance is outside the scope of our study, our result concerning the opportunity cost suggests that it may have been premature to grant permanent exemption to the non-accelerated filers. This result is especially important considering current discussions to grant Section 404b exemption to even larger firms (up to a market capitalization of $500 million).

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