Research links: between now and the crash
Tuesdays are all about academic (and practitioner) literature at Abnormal Returns. You can check out last week’s edition including a look at...
A recent study explores how integrating large language models (LLMs) into investment processes could potentially enhance a trader's performance. However, the application of AI in trading goes beyond mere speculation, as Bloomberg reports that AI bots are actively gathering data from sources like FRED. A historical analysis by Morningstar reveals that there is a minimal spread between the performance of core bond managers, suggesting that the extra effort to outperform these managers may not always yield significant returns.
Larry Swedroe's Substack post discusses the varying valuations private credit funds place on loans, highlighting the complexity of this asset class. According to Professor NBER's research, the growing narrowness of elite economics may indicate a limitation in the breadth of perspectives available to economic decision-makers. The concept of "shooting the moon" bonuses in the financial sector, despite their allure, may not be as impressive as they appear, as per a paper on SSRN.
Norway's experience with a wealth tax, as examined by NBER, suggests that such measures may not be universally beneficial. A study on SSRN delves into pre-CRSP equity returns, providing insights into the investment landscape prior to the establishment of this database. Meanwhile, Fa-Mag's research explores the effects of net stock issuance on market returns, offering valuable information for investors.
Tail risk programs, according to AlphaArchitect, face a behavioral issue rather than a purely financial one, indicating the complexity of risk management strategies in the modern investment landscape. Carlo Zattarini's conversation with Gary Antonacci sheds light on the evolution of dual momentum models, a popular strategy in investment management.
Lastly, an alphainacademia.com roundup of recent academic research encompasses various topics, including "Activeness in Passive Investing: Evidence from Japanese Index Funds," further enriching the discourse on investment methodologies.
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