Graduation Year
2016
Date of Submission
11-2015
Document Type
Campus Only Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics
Reader 1
Janet K. Smith
Terms of Use & License Information
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.
Rights Information
© 2016 Brian A. Eckhardt
Abstract
This paper applies a short-term event study methodology to analyze the performance of common stock recommendations made by the Wall Street Journal’s Ahead of the Tape, CNBC’s Mad Money and Value Investors Club. The results suggest that a portfolio that replicates the long and short recommendations from Value Investors Club earns significant abnormal returns. These returns persist even after accounting for trading costs, the bid-ask spread and stock loans. Abnormal returns to Mad Money’s positive endorsements are also significant for the two days after announcement, but are erased by transaction costs. Across all three sources, abnormal returns rarely correspond with abnormal trading volume, an unexpected dichotomy that invites further research.
Recommended Citation
Eckhardt, Brian A., "Show Me the Money: Performance Evaluation of Professional Stock Recommendations" (2016). CMC Senior Theses. 1275.
https://scholarship.claremont.edu/cmc_theses/1275
This thesis is restricted to the Claremont Colleges current faculty, students, and staff.
