The efficient-market hypothesis (EMH) is a hypothesis in financial economics that states that asset prices reflect all available information. A direct implication is that it is impossible to "beat the market" consistently on a risk-adjusted basis since market prices should only react to new information.
In corporate finance, capital structure refers to the mix of various forms of external funds, known as capital, used to finance a business. It consists of shareholders' equity, debt, and preferred stock, and is detailed in the company's balance sheet. The larger the debt component is in relation to the other sources of capital, the greater financial leverage the firm is said to have. Too much debt can increase the risk of the company and reduce its financial flexibility, which at some point creates concern among investors and results in a greater cost of capital. Company management is responsible for establishing a capital structure for the corporation that makes optimal use of financial leverage and holds the cost of capital as low as possible.
In finance, a portfolio is a collection of investments.
Sanford "Sandy" Jay Grossman is an American economist and hedge fund manager specializing in quantitative finance. Grossman’s research has spanned the analysis of information in securities markets, corporate structure, property rights, and optimal dynamic risk management. He has published widely in leading economic and business journals, including American Economic Review, Journal of Econometrics, Econometrica, and Journal of Finance. His research in macroeconomics, finance, and risk management has earned numerous awards. Grossman is currently Chairman and CEO of QFS Asset Management, an affiliate of which he founded in 1988. QFS Asset Management shut down its sole remaining hedge fund in January 2014.
Momentum investing is a system of buying stocks or other securities that have had high returns over the past three to twelve months, and selling those that have had poor returns over the same period.
Zvi Bodie is an American economist, author and professor. He was the Norman and Adele Barron Professor of Management at Boston University, teaching finance at Questrom for 43 years before retiring in 2015. His textbook, Investments, (with Kane and Marcus) is the market leader and is used in the certification programs of the CFA Institute and the Society of Actuaries. Bodie's work has centered on pension finance and investment strategy. He continues to do consulting work and media interviews.
There are several concepts of efficiency for a financial market. The most widely discussed is informational or price efficiency, which is a measure of how quickly and completely the price of a single asset reflects available information about the asset's value. Other concepts include functional/operational efficiency, which is inversely related to the costs that investors bear for making transactions, and allocative efficiency, which is a measure of how far a market channels funds from ultimate lenders to ultimate borrowers in such a way that the funds are used in the most productive manner.
In finance, momentum is the empirically observed tendency for rising asset prices or securities return to rise further, and falling prices to keep falling. For instance, it was shown that stocks with strong past performance continue to outperform stocks with poor past performance in the next period with an average excess return of about 1% per month. Momentum signals have been used by financial analysts in their buy and sell recommendations.
A portfolio manager (PM) is a professional responsible for making investment decisions and carrying out investment activities on behalf of vested individuals or institutions. Clients invest their money into the PM's investment policy for future growth, such as a retirement fund, endowment fund, or education fund. PMs work with a team of analysts and researchers and are responsible for establishing an investment strategy, selecting appropriate investments, and allocating each investment properly towards an investment fund or asset management vehicle.
Gregg S. Fisher, CFA, is an American investment manager. In 2019, he founded Quent Capital and serves as Portfolio Manager for the asset management firm which features a global small company long/short equity investment strategy. He was also the Founder and Head of Quantitative Research and Portfolio Strategy of Gerstein Fisher, an investment management and advisory firm that became part of People’s United Bank in 2016.
Clifford Scott Asness is an American hedge fund manager and the co-founder of AQR Capital Management. According to an April 2020 Forbes profile, Asness' estimated net worth was $2.6 billion.
The Emory Center for Alternative Investments is a part of the Goizueta Business School at Emory University. The Center seeks to provide independent research to the Alternative Investments Industry through papers, conferences, and education. The Center primarily focuses on the needs of Institutional Investors as they navigate the many options available in the Alternative Investment Industry but also partners with asset managers to conduct research in an effort to remain objective. The Center for Alternative Investments focuses on hedge funds, Private Equity, Venture Capital, and Real Estate.
Allan Weiss is an American financial analyst and economist who is the founder and CEO of Weiss Analytics. He is co-founder and former CEO of Case Shiller Weiss, producer of the Standard & Poor's Case–Shiller index, which was acquired by Fiserv in 2002. Weiss is also co-founder and CEO of Valshield Inc. He serves on the board and advises several real estate investment companies focussing on single family and multi-family properties.
In finance, the capital structure substitution theory (CSS) describes the relationship between earnings, stock price and capital structure of public companies. The CSS theory hypothesizes that managements of public companies manipulate capital structure such that earnings per share (EPS) are maximized. Managements have an incentive to do so because shareholders and analysts value EPS growth. The theory is used to explain trends in capital structure, stock market valuation, dividend policy, the monetary transmission mechanism, and stock volatility, and provides an alternative to the Modigliani–Miller theorem that has limited descriptive validity in real markets. The CSS theory is only applicable in markets where share repurchases are allowed. Investors can use the CSS theory to identify undervalued stocks.
David Hillier is Associate Principal at the University of Strathclyde and Executive Dean of the Strathclyde Business School, having previously held the Ziff Chair in Financial Markets at Leeds University Business School, University of Leeds. He has taught financial and accounting topics in a number of academic institutions in Greece, Italy, Malaysia, the Netherlands, Spain, Tanzania, Thailand and others. Professor David Hillier is an author of several books and other publications in the field of finance, corporate governance and accounting, including "Fundamentals of Corporate Finance: European Edition".
Campbell Russell "Cam" Harvey is a Canadian economist, known for his work on asset allocation with changing risk and risk premiums and the problem of separating luck from skill in investment management. He is currently the J. Paul Sticht Professor of International Business at Duke University's Fuqua School of Business in Durham, North Carolina, as well as a research associate with the National Bureau of Economic Research in Cambridge, Massachusetts. He is also a research associate with the Institute of International Integration Studies at Trinity College Dublin and a visiting researcher at the University of Oxford. He served as the 2016 president of the American Finance Association.
Avanidhar Subrahmanyam is a professor and named chair at the University of California Los Angeles. He is an expert in stock market activity and behavioral finance, and has published a number of papers on financial markets.
Factor investing is an investment approach that involves targeting quantifiable firm characteristics or “factors” that can explain differences in stock returns. Security characteristics that may be included in a factor-based approach include size, low-volatility, value, momentum, asset growth, profitability, leverage, term and cost of carry.
Paola Sapienza is an American and Italian economist. She is a member of the Kellogg School of Management faculty at Northwestern University. She is also a research associate at the NBER and CEPR. Her fields of interest include financial economics, cultural economics, and political economy.
Style drift occurs when a mutual fund's actual and declared investment style differs. A mutual fund’s declared investment style can be found in the fund prospectus which investors commonly rely upon to aid their investment decisions. For most investors, they assumed that mutual fund managers will invest according to the advertised guidelines, this is however, not the case for a fund with style drift. Style drift is commonplace in today’s mutual fund industry, making no distinction between developed and developing markets according to studies in the United States by Brown and Goetzmann (1997) and in China as reported in Sina Finance.
