Should you ignore financial academic research?

Excerpted text from Andrew Beer’s article in Investment Europe today:

Marketers like nothing more than to pitch a product “grounded in decades of academic research.”  The implication is that objective academics have dispassionately studied market phenomena to uncover canonical truths.  In theory, this makes the investment decision easy – think “value outperforms growth” or, more recently, “quality stocks outperform.”

Don’t be fooled.  Academic papers are subject to five very serious limitations:

1.    Publishing Bias
2.    The Big Splash Phenomenon
3.    The Assumptions Are Everything
4.    The World Changes – A Lot
5.    Business and Academia Overlap

Click here to read the full article, and see a more detailed analysis of each.

October 12, 2016