Simple sounds make for sound investments
Easily pronounced stocks do better on the market.
For those of you struggling to pick a winner in the complex world of stocks and shares, help is at hand. A psychology study has found that, at least in the short-term, stocks with names that are easier to pronounce consistently outperform those with more confusing monikers.
Read the story here.
Comments
That's completely bogus. These researchers should look into the Efficient Market Theory. They obviously know nothing about investing. Did their $1000 fictitious investment event beat the market for the year? The article didn't say. I can't believe that such garbage actually got published.
Posted by: Andy | May 31, 2006 02:05 PM
Very interesting thesis. I would venture further to say that investors will even buy and sell stocks with symbols bearing a superficial resemblence to certain issues or events.
Shares of a trucking company with the symbol 'FUEL' rose and fell sharply in 2005 and 2006 at the same time as stocks of companies tied to the oil and gas industry fluctuated with the price of oil. However, due diligence reveals that that company's fundamentals have little to do with oil or gas discovery or production. It specializes in final delivery like a filling station. It seems speculators followed the symbol instead of the facts and drove the share price up temporarily.
Posted by: Trader Dan | June 1, 2006 04:25 PM