Growth stocks

Corporate conferences have long been recognized as pivotal events in financial markets, serving as catalysts that signal upcoming innovations and strategic shifts. Scheduled corporate events induce market reactions that can be systematically analyzed to reveal predictable return patterns. In this work, we focus on examining the return drift exhibited by technology stocks in the days surrounding their respective conferences, employing simple quantitative methods with daily price data.

The hypothesized return drift is premised on the notion that investor sentiment and market dynamics are significantly altered by the information disseminated at these conferences. Investors, reacting to both anticipatory signals and post-announcement adjustments, tend to drive prices in a measurable manner in the windows immediately preceding, during, and after the events. By systematically analyzing stocks of companies such as Apple, Google, and Microsoft, this study aims to validate the existence of these drift patterns and shed light on the underlying mechanisms, thereby enhancing mutual understanding of event-driven asset pricing dynamics.

Over the past decade and a half, the US equities have set the hard-to-beat performance benchmark. Nearly all of the other countries, no matter if small or big, emerging or developed, have lagged behind. However, what are the forces behind this outperformance? Why did most of the other markets and even investing styles bow to the US large-cap growth dominance? A new paper written by David Blitz nicely analyses the rise of the behemoth.

The aim of this article is multifold. It aims to answer the research question: does a portfolio consisting of top innovators outperform the S&P 500 index? To address this question, a strategy of investing long in top innovators according to their ranking is developed, and its performance is compared to that of the broad-based index. Based on the common belief that higher innovativeness carries higher risk, it aims to evaluate the volatility associated with innovative stocks. Additionally, it aims to analyze the impact of sector factors on the portfolio’s performance. Finally, it conducts a comparative analysis between the portfolio’s performance and that of the ARK Innovation ETF (ARKK), which specifically focuses on investing in companies relevant to the theme of disruptive innovation.

Phenomenal innovation, new technologies, growth of social media, and e-commerce have been characteristics of the last decades. BigTech companies such as Google, Facebook (Meta), Amazon, Apple, and Microsoft are becoming so increasingly popular. So now, in connection to the actual carnage on the financial markets, the question arises: are BigTech firms the new “Too Big to Fail”?

Another period of long sustained high inflation is probably right around the corner, as the Russia-Ukraine Conflict keeps evolving, and its end is nowhere to be seen. In this article, we analyzed the Consumer Price Index from the Federal Reserve Bank of Minneapolis, which includes the rate of inflation in the USA since 1913. We found multiple years during which the inflation was abnormally high and analyzed the performance of the known equity long-short factors. The factors with the highest average performance are HML (value stocks), long-term reversal, momentum, and energy stocks. On the other hand, tech stocks, bond-like assets, and the SMB factor should be avoided during the high inflation periods.

Every week, through these posts, we point to interesting academic research papers. This week´s blog is slightly different, yet no less engaging. This blog includes numerous interesting charts from more than hundred charts in the CUSTOM REPORT: U.S. LARGE INDEX by the PHILOSOPHICAL ECONOMICS using OSAM Research Database. The report consists of the visually presented analysis of the U.S. Large index. The analysis includes the composition, returns, individual stocks, sector and factor allocations, and six fundamentals. The report contains comprehensive information about the large caps in the U.S. market from 1963 to 2020 and is worthy of a look.

We wish you all Merry Christmas …