Research Highlights – February 2018

An array of new research by economist Nicola Gennaioli and colleagues helps explain why contrarian investors outperform those who follow the herd.  Specifically, the best way to gain excess-returns turns out to be investing in the shares least favored by analysts.  The research shows that during the last thirty-five years, investing in the 10 percent of U.S. stocks about which analysts were most optimistic would have yielded on average 3 percent a year.  By contrast, investing in the 10 percent of stocks about which analysts were most pessimi.....