Stock‐market “Patterns” and Financial Analysis: Methodological Suggestions

Roberts, Harry V.

doi:10.1111/j.1540-6261.1959.tb00481.x

Cited by 149 publications

(83 citation statements)

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“…14 Moreover, the psychological problems faced by an 13 The random walk hypothesis emerged in the papers of Kendall (1953), Roberts (1959), and Alexander (1961) which are collected in Cootner's (1964) classic The Random Character of Stock Market Prices. 14 Summers (1986) was among the first to point out the weakness of the empirical foundations of the random walk; De Bondt and Thaler (1985), Poterba and Summers (1988) and Jegadeesh and Titman (1993) among others present evidence of 'mean reversion' in stock price behavior.…”

Section: The Academic Viewmentioning

confidence: 99%

Dollar Cost Averaging

Brennan

Torous³

2005

Review of Finance

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Dollar Cost Averaging is a strategy for purchasing equity securities that is widely recommended by professional investment advisors and commentators, but which has been virtually ignored by academic theorists and textbook writers. In this paper we explore whether the strategy is but another instance of irrational behavior by individual investors, or whether it is an investment heuristic that has survival value in an environment in which security prices exhibit mean reversion behavior that has only belatedly been recognized by academic theorists. Our evidence supports the view that the uninformed individual investors who follow this strategy in purchasing individual stocks to add to an existing portfolio are better off than if they followed the rational strategies traditionally recommended by academics. Copyright Springer 2005

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Section: The Academic Viewmentioning

confidence: 99%

Dollar Cost Averaging

Brennan

Torous³

2005

Review of Finance

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“…'' In addition, even if stock prices completely followed a random walk, people would be able to convince themselves that there are patterns having predictive value. In laboratory experiments, subjects are reported to have found patterns in purely random sequences of stock prices (Roberts, 1959;Warneryd, 2001). …”

Section: Introductionmentioning

confidence: 98%

Technical analysis as the representation of typical cognitive biases

Zielonka

2004

International Review of Financial Analysis

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“…Kendall (1953) and Roberts (1959) first reported that stock prices follow random walks. Since then, the random walk hypothesis has been tested by many researchers, and has become the dominant notion on stock price dynamics.…”

Section: Introductionmentioning

confidence: 97%