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I obtained a BA degree
from the University of the South and an MBA from the University of North
Carolina. After a 35 year career as a financial analyst on Wall Street,
I’ve retired to a small town on the Eastern Shore of Maryland. During my
time on Wall Street, both as an employee of several brokerage firms (e.g.,
Drexel, Lehman, PaineWebber) and head of my own consulting firm,
Investment Analytics, I wrote a number of articles (and/or research
papers) relevant to the stock market on both the practical and theoretical
sides.
Since retirement, I’ve continued to write and have now
compiled a considerable inventory of “papers,” only three of which have
been submitted for publication. One of these, “Earnings Expectations and
Security Prices,” was published in the Financial Analysts Journal and has
often been cited by other writers in the field of financial analysis. The
other two were conditionally accepted by the Financial Analysts Journal
and The Journal of Portfolio Management. I did not pursue publication of
them because of personal considerations around the time of their
acceptance when all of my energies were devoted to starting my consulting
firm.
Lately, however, I have had time to do a great deal of writing
and the opportunity to enhance my existing group of papers. I feel the
time has come to publish them on the internet
rather than trying to put a book together. If, on the other hand, I were
preparing a book I would title it, "Science versus Reality on the New York
Stock Exchange", which is the overriding theme of this website.
It is hoped the site will be of interest to practitioners and
academics on both sides of the aisle regarding the validity and usefulness
of Modern Portfolio Theory, the Efficient Market Hypothesis and the
Capital Asset Pricing Model. Most of the papers presented, however, do not
take on the paradigms of MPT, EMH and CAPM directly. Rather they approach
those disputed theories by providing actual examples that make the “three
horsemen” of Modern Capital Market Theory look suspect in a number of
ways.
Thus, the real objective of the website is to shore up
behavioral finance by giving as many practical examples as possible to
show that John Maynard Keynes (not to mention the father of security
analysis, Benjamin Graham) were as right about what drives the stock
market in their assessments made years ago as they are today. And if those
two were correct, then Modern Capital Market Theory is wrong about many
things.
In short, I am casting my lot with the proponents of
behavioral finance. In that regard, I understand that two of the best
books on the subject (which I have not had a chance to read) are Beyond
Greed and Fear: Finance and the Psychology of Investing, by Hersh Sherfrin
and Advances in Behavioral Finance, edited by Richard Thaler. Three books
that I have read exhaustively (and to which I am more or less responding
here) are: Modern Developments in Investment Management, edited by James
Lorie and Richard Brealey and The Stock Market: Theories and Evidence, by
James Lorie and Mary Hamilton and Capital Ideas by Peter Bernstein.
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