In a recent Financial Planning article, Craig Israelsen advocated using stock market size segments to construct portfolios rather than a total market approach.
As this week’s award of the Nobel Prize in Economics to Richard Thaler confirmed, the existence of behavioral biases in finance is no longer a controversial theory.
What all these headlines have in common is that they are inherently misleading. For instance, the first statement reflects a common misconception that the Bank of Japan (BoJ) owns more than two-thirds of the Japanese stock market.
Keen watchers of the ever-developing exchange-traded product space may have noticed an intriguing development last week, as the first purely “artificial intelligence”-based stock-picking ETF launched.
Short-termism (or quarterly capitalism) is defined as companies’ fixation on managing for the short term, with decisions driven by the need to meet quarterly earnings at the cost of long-term investment.