Patience pays
Article Abstract:
Analysts' forecasts of United Kingdom companies' earnings have tended to be inaccurate because they have extrapolated from past earnings, according to research from Exeter University's George Bilkley and Richard Harris. Earnings can be forecast more accurately by using the average. Investors can outperform the market by buying stocks for which analysts had predicted low growth, though investors have to hold the stocks for five years to do this. Fund managers do not have an incentive to hold stocks for such a long period so their approach focuses too much on the short term.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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Footsie's single currency fantasy
Article Abstract:
United Kingdom stock prices have risen due to a belief that the UK will join European monetary union (Emu). This could help stocks by removing currency risks related to the German mark. Emu could also bring greater stock price volatility because exchange rate changes would no longer soften the impact of recessionson earnings growth. The UK could have an inappropriate interest rate policy if its business cycle is not synchronised with that of mainland Europe. Emu could help stocks but this is not certain.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1997
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Has the stock market risen too far?
Article Abstract:
There is a danger of a correction in stock prices which has become more apparent in the year to April 1998. Stock price reversals tend to be associated with conspicuous consumption and house prices rises. There is some evident that these trends are developing in the United Kingdom. There is also likely to be a negative effect from the Asian financial crisis. Investors may not be prepared to push up stock prices to even higher levels, and may be aware of the danger of losing their gains.
Publication Name: Investors Chronicle
Subject: Business
ISSN: 0261-3115
Year: 1998
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