scholarly journals Investment Strategies and Trading Approaches in Behavioural Finance

2020 ◽  
Vol 8 (1) ◽  
pp. 42-47
Author(s):  
Bham Bham Babu
Keyword(s):  
Behavioral Finance ◽  
Investment Strategies ◽  
Behavioural Finance ◽  
Exchange Traded Fund

The behavioral finance literature documents several long-term investment strategies that persistently generate superior risk-adjusted returns. This study focuses on several investment strategies, trading approaches, and problems with the traditional financial theory’s explaining their logic and the historical returns generated by these strategies. In the case of the investor’s sentiment indicators and the anomaly, an exchange-traded fund (ETF) has been created to enable investors to simply and efficiently invest in the strategy.

Commodity Exchange-Traded Funds

2018 ◽  
Author(s):  
Christopher Milliken
Keyword(s):  
Portfolio Diversification ◽  
Futures Contracts ◽  
Spot Price ◽  
Exchange Traded Funds ◽  
Investment Strategies ◽  
Regulatory Structure ◽  
Commodity Exchange ◽  
Asset Class ◽  
Exchange Traded Fund

Commodity exchange-traded funds (ETCs), which debuted in 2004, enable investors to access an asset class previously difficult or expensive to access. Although a small segment of the overall exchange-traded fund (ETF) universe, ETCs have grown in popularity with both speculators and investors looking for long-term portfolio diversification. Examples of the types of commodities that are now accessible through ETCs include gold, oil, and agricultural. The literature on ETCs is limited, but academic and industry work has centered on using futures contracts to replicate the performance of the underlying commodities spot price as well as the effect additional capital has had on the integrity of the futures market. This chapter covers this topic by reviewing the growth, investment strategies, and regulatory structure of ETCs as well as the underlying effects these funds have had on the underlying markets with which they engage.

scholarly journals A Study on Application of the Behaviourial Finance in Investment Decisions

2020 ◽  
pp. 251-255
Keyword(s):  
Behavioral Finance ◽  
Building Blocks ◽  
Efficient Market Hypothesis ◽  
Investment Strategies ◽  
Efficient Market ◽  
Behavioural Finance ◽  
Limits To Arbitrage ◽  
The People ◽  
New Development ◽  
Full Rationality

Financial markets are influenced by various factors but the most important factors is the reaction as well as perception of the people. Basically there are two discipline of financial market study i.e., Traditional finance and the new development called Behaviourial finance.Traditional finance foundation is truly based on efficient market concept&Behavioral finance argues that some financial phenomena can plausibly be understood using models in which some agents are not fully rational. The field has two building blocks: limits to arbitrage, which argues that it can be difficult for rational traders to undo the dislocations caused byless rational traders; and psychology, which catalogues the kinds of deviations from full rationality we might expect to see. We close by assessing progress in the field and speculating about its future course. In this paper an attempt has been made to highlight the shortcomings of the traditional finance theories as pointed out by behavioural finance supporters and also a discussion on the significance of behavioural finance. While conventional academic finance emphasizes theories such as modern portfolio theory and the efficient market hypothesis, the emerging field of behavioral finance investigates the psychological and sociological issues that impact the decision-making process of individuals, groups, and organizations. This paper will discuss some general principles of behavioral finance including the following: overconfidence, financial cognitive dissonance, the theory of regret, and prospect theory. In conclusion, the paper will provide strategies to assist individuals to resolve these “mental mistakes and errors” by recommending some important investment strategies for those who invest in stocks and mutual funds

The profitability of algorithmic trading systems based on football sentiment

2020 ◽  
Vol 42 (1) ◽  
pp. 33-46
Author(s):  
Raúl Gómez-Martínez ◽  
Camila Marqués-Bogliani ◽  
Jessica Paule-Vianez
Keyword(s):  
Financial Markets ◽  
Investment Decisions ◽  
Futures Market ◽  
Algorithmic Trading ◽  
Investment Strategies ◽  
Measurable Effect ◽  
Behavioural Finance ◽  
Trading Systems ◽  
European Football

Behavioural finance has shown that investment decisions are the result of not just rational but also emotional brain processes. On the assumption that emotions affect financial markets, it would seem likely that football results might have a measurable effect on financial markets. To test this, this study describes three algorithmic trading systems based exclusively on the results of three top European football teams (Juventus, Bayern München and Paris St Germain) opening long or short positions in the next market season of the futures market of the index of each country (MIB (Milano Italia Borsa), DAX (Deutscher Aktien Index) and CAC (Cotation Assistée en Continu). Depending on the outcome of the last game played a long position was taken after a victory and a short position after a draw or defeat. The results showed that the algorithmic systems were profitable in the case of Juventus and Bayern whereas in the case of PSG, the system was profitable, but in an inverse way. This study shows that investment strategies that take account of sports sentiment could have a profitable outcome.

Sovereign Development Funds

2017 ◽  
Author(s):  
Peter Bruce-Clark ◽  
Ashby H.B Monk
Keyword(s):  
Financial Markets ◽  
Global Economy ◽  
Private Investment ◽  
Dual Function ◽  
Investment Strategies ◽  
Objective Functions ◽  
Expected Return ◽  
Investment Returns ◽  
High Investment

In a slowing global economy with diminished confidence in the long-term prospects of public financial markets, many institutional investors are looking for innovative, and often private, investment strategies to meet expected return targets. One source of potential inspiration has, perhaps surprisingly, come from the community of sovereign development funds. SDFs are strategic, government-sponsored investment organizations with dual objective functions: to deliver high financial performance, while fostering development. Despite expectations that this dual function inevitably leads to financial underperformance, certain SDFs have actually delivered consistently high investment returns, especially in private markets. As such, SDF strategies are increasingly being used as models for investment strategies among non-developmental investment organizations. This chapter explores the rise of SDFs, explains the differences between SDFs and SWFs, and substantiates variations in their models of governance and management. In doing so, its goal is to situate SDFs in the changing world of global financial markets and public policy.

scholarly journals Modeling optimal long-term investment strategies of hybrid wind-thermal companies in restructured power market

2019 ◽  
Vol 7 (5) ◽  
pp. 1267-1279 ◽  
Author(s):  
Mohammad Tolou ASKARI ◽  
Mohd. Zainal Abdin Ab. KADIR ◽  
Mehrdad TAHMASEBI ◽  
Ehsan BOLANDIFAR
Keyword(s):  
Power Market ◽  
Investment Strategies

GMO: The Value Versus Growth Dilemma

2017 ◽  
pp. 1-16
Author(s):  
George (Yiorgos) Allayannis ◽  
William Burton
Keyword(s):  
New Economy ◽  
Expected Returns ◽  
Investment Strategies ◽  
Growth Orientation ◽  
Value Investing ◽  
Growth Stocks ◽  
Interesting Story ◽  
Old Economy ◽  
Valuation Ratios

Dick Mayo, one of the most celebrated value investors in America was puzzled by the New Economy's continuous bias toward growth investment strategies. He examines the basics of his philosophy versus that of a growth orientation by evaluating the long-term expected returns of several value and growth stocks. This case can be used to pursue several objectives: (1) to define value and growth investing-where the differences lie and whether one approach is superior to the other or whether both have merit; and (2) to discuss issues related to consistency of one's investment philosophy. Should one stay true to one's philosophy even when the market seems to run counter to it for a prolonged period of time? Can value investing deliver value in this New Economy or is it only an Old Economy concept? The students are instructed to perform basic valuations of Cisco Systems (a growth company), CVS, R.R. Donnelley, and Manor Care (value companies) and compute their long-term expected returns. The case comes with an Excel spreadsheet containing the data and relevant valuation ratios for the above firms. The valuations are straightforward, but they tell an interesting story: the expected returns of glamorous stocks in reality may not be so glamorous.

Sign in / Sign up

Export Citation Format

Share Document