scispace - formally typeset
Search or ask a question
Author

Edward M. Miller

Bio: Edward M. Miller is an academic researcher from University of New Orleans. The author has contributed to research in topics: Population & Trading strategy. The author has an hindex of 18, co-authored 76 publications receiving 1556 citations.


Papers
More filters
Journal Article
TL;DR: Siegel as mentioned in this paper argues that stocks have been a wonderful long run investment, and can be expected to continue to be so, and makes a convincing case that stocks are much better for such long-run purposes than either bonds or money market instruments.
Abstract: Stocks for the Long Run Jeremy J. Siegel McGraw Hill, 1998 Jeremy Siegel has written a book that could have a great effect on the reader's wealth while challenging conventional academic views. It is written at the popular level but references the underlying academic articles (i.e. it is footnoted). Siegel is a finance professor at the University of Pennsylvania's Wharton School, so he is well qualified to draw on the academic literature. The basic message of the book is that stocks have been a wonderful long run investment, and can be expected to continue to be so. The emphasis is on the long run, because there is no doubt that stocks can be exceedingly risky in the short run. As an illustration of stocks' short-run risk, consider October 19, 1987, when the stock market dropped by 22.6% in one day (see Miller 1999 for a review of a book focusing on this episode). Because of the short-run riskiness of stocks, one who is saving for an event in the near future (such as the next vacation), runs a considerable risk of losing money. However, most saving is done not for such short-run purposes but for long-run purposes such as retirement, or to leave money to descendants. Siegel makes a convincing case that stocks are much better for such long-run purposes than either bonds or money market instruments. Bank deposits usually earn even less than money market instruments, and hence are also dominated by stocks. The textbooks I use in teaching finance present evidence that stocks have, on average, outperformed bonds since 1926. Siegel carries this evidence back to 1802, presenting data on the returns from stocks and bonds from 1802 to 1997. Over this long period stocks have had an average return of 8.4%, composed of price increases averaging 3.0%, and dividends averaging 5.4%. In contrast, long-term US government bonds have averaged 4.7%, and short-term US governments, 4.3%. This superiority of stocks held true for major subdivisions of the period studied also. Economists talk about the equity risk premium, the differential between stocks and bonds, which is usually interpreted as the reward to bearing the risks of equity. This of course varies tremendously year to year. Siegel plots a thirty-year running average of the equity risk premium. It is striking that it is virtually always well above 0% (the exceptions appear to be around 1841 and 1861, which are well over a century ago). Thus, for someone investing for the long run, it appears stocks virtually always exceed bonds in return. The riskiness of having stocks underperform bonds turns out to depend very much on the holding period. A fascinating graph (showing data from 1802 to 1997) shows the maximum and minimum real (i.e., inflation adjusted) annualized returns for various holding periods (p. 27). For short holding periods, there is the expected result that one can lose more money on stocks than on either bonds or T-bills, frighteningly more. The worst one-year return on stocks is -30.6% (the best is 66.6%). Incidentally, bonds prove to have appreciable risk over short periods also, with the worse bond performance being -21.9%, and the worst Treasury bill performance -15.6%. The bond and Treasury bill losses occur when high inflation lowers their real purchasing power. Bonds have this risk. In addition, they can experience large losses when interest rates rise unexpectedly, reducing their risk. That stocks are riskier than bonds, and bonds riskier than treasury bills (and bank deposits and other money market instruments) is standard textbook material. It is usually explained by investors disliking risk and being willing to incur higher risk only if rewarded with greater returns. Thus, investors should be willing to hold stocks only if promised much higher returns than bonds. However, most investors (especially those with large sums of money) have longer horizons than one year. However, the equity risk premium appears to shrink with holding periods. …

359 citations

Journal ArticleDOI
TL;DR: DifferentialMyelination in the mouse brain might be able to explain the heterosis observed for myelination, brain size, caudal nerve conduction velocity, and maze performance observed.

150 citations

Journal ArticleDOI

149 citations

Journal Article
Abstract: A recent book analyzing a large database about "insider trading" as reported to the Securities and Exchange Commission gives valuable insights into what can be learned, by investors and market analysts, from the buying and selling done by insiders. In this article, the book's results are reported, and commentary is added about the implications. Key Words: Insider trading, market indicators for investors, H. Ne)jats Seyhun, insiders' market behavior, statistical studies to predict securities market. H. Neyjats Seyhun's Investment Intelligence from Insider Trading (MIT Press, 1998) reports on a massive study of the ability of statistics on insider trading from 1973 to 1994 to predict U.S. stock returns. It should be of interest to both stock market investors and financial economists. The federal Securities Exchange Act of 1934 defines "insider" in two ways, one of which says insiders are high-level corporate executives, board members, or stockholders with over 10% ownership in the company. Insiders of this kind are forbidden from benefiting from any positions held for less than six months, and anyone in possession of material, non-public information (the other definition of "insider") is forbidden from trading in the firm's securities while having such information. To enforce these regulations, insiders of the first type are required to report their trading of the stocks for which they are insiders within 10 days of the month's close to the Securities and Exchange Commission, which then makes it public. Seyhun combines this data with other stock market data to also report on the profitability of investment rules involving such measures as priceearnings ratios, book-to-market ratios, take-overs, and trends in prices. In Seyhun's study, insider trading in a particular company is first aggregated by months, with a month where the insiders bought more shares than they sold defined as a buying month, and one in which they sold more than they bought being defined as a selling month. This resulted in 144,884 buy months and 164,309 sell months, making this a large database. The surplus of selling is probably because the category of insider includes many who started firms (or got in early), and who afterwards tend to be net sellers. Since most insiders have the bulk of their wealth in their company, standard financial advice would be to diversify (which of course is legal). It should be noted that much insider trading is for such legitimate purposes as diversification and personal liquidity. It is also legal for insiders to make trades based on public information (if, at the time, they have no inside material information). Of course, given their concentrated position and incentive to keep up-to-date on their companies, insiders may be better able to evaluate and use the public information. While it is illegal for insiders to trade on material, non-public information, it is legal to refrain from trading on the basis of material, non-public information, a point Seyhun does not make. To illustrate, consider an individual who has a substantial position in a company (perhaps from being a founder, or from having exercised many options). Having little invested outside of this company, he decides to diversify his investments by selling a portion every quarter, carefully timed so that he is not selling when he has material, non-public information (such as an unusually bad forthcoming earning announcement). This is a very sensible, rational policy most financial planners would approve of, Now suppose this insider receives non-public information that the company's earnings will be unusually good this quarter (or even that the company is negotiating to be taken over at a big premium). The insider is legally free to cancel his planned (but probably unrevealed) sales, making them later when the price is likely to be higher. Since he has used his insider information not to trade at a profit, but to avoid trading when he had material information, he has not engaged in illegal insider trading, although he has still benefited from his inside information. …

107 citations

Journal ArticleDOI
TL;DR: In this article, an analysis of answers to public opinion questionnaires shows evidence that the opinions of female twins resemble the male answers more if the co-twin is male than if it is female, a result which is interpreted as providing evidence of testosterone transfer.

100 citations


Cited by
More filters
Journal ArticleDOI
TL;DR: Preface to the Princeton Landmarks in Biology Edition vii Preface xi Symbols used xiii 1.
Abstract: Preface to the Princeton Landmarks in Biology Edition vii Preface xi Symbols Used xiii 1. The Importance of Islands 3 2. Area and Number of Speicies 8 3. Further Explanations of the Area-Diversity Pattern 19 4. The Strategy of Colonization 68 5. Invasibility and the Variable Niche 94 6. Stepping Stones and Biotic Exchange 123 7. Evolutionary Changes Following Colonization 145 8. Prospect 181 Glossary 185 References 193 Index 201

14,171 citations

Book
01 Jan 1998
TL;DR: A pesar de la relativamente corta historia de la Psicologia como ciencia, existen pocos constructos psicologicos que perduren 90 anos despues de their formulación and continuen plenamente vigentes in la actualidad as mentioned in this paper.
Abstract: A pesar de la relativamente corta historia de la Psicologia como ciencia, existen pocos constructos psicologicos que perduren 90 anos despues de su formulacion y que, aun mas, continuen plenamente vigentes en la actualidad. El factor «g» es sin duda alguna uno de esos escasos ejemplos y para contrastar su vigencia actual tan solo hace falta comprobar su lugar de preeminencia en los modelos factoriales de la inteligencia mas aceptados en la actualidad, bien como un factor de tercer orden en los modelos jerarquicos o bien identificado con un factor de segundo orden en el modelo del recientemente desaparecido R.B.Cattell.

2,573 citations

Journal ArticleDOI
TL;DR: Goyal and Welch as mentioned in this paper showed that many predictive regressions beat the historical average return, once weak restrictions are imposed on the signs of coefficients and return forecasts, and that the implied predictability of returns is substantial at longer horizons.
Abstract: Goyal and Welch (2007) argue that the historical average excess stock return forecasts future excess stock returns better than regressions of excess returns on predictor variables. In this article, we show that many predictive regressions beat the historical average return, once weak restrictions are imposed on the signs of coefficients and return forecasts. The out-of-sample explanatory power is small, but nonetheless is economically meaningful for mean-variance investors. Even better results can be obtained by imposing the restrictions of steady-state valuation models, thereby removing the need to estimate the average from a short sample of volatile stock returns. (JEL G10, G11) Towards the end of the last century, academic finance economists came to take seriously the view that aggregate stock returns are predictable. During the 1980s, a number of papers studied valuation ratios, such as the dividend-price ratio, earnings-price ratio, or smoothed earnings-price ratio. Value-oriented investors in the tradition of Graham and Dodd (1934) had always asserted that high valuation ratios are an indication of an undervalued stock market and should predict high subsequent returns, but these ideas did not carry much weight in the academic literature until authors such as Rozeff (1984), Fama and French (1988), and Campbell and Shiller (1988a, 1988b) found that valuation ratios are positively correlated with subsequent returns and that the implied predictability of returns is substantial at longer horizons. Around the same time, several papers pointed out that yields on short- and long-term treasury and corporate bonds are correlated with subsequent stock returns (Fama and Schwert,1977;KeimandStambaugh,1986;Campbell,1987;FamaandFrench, 1989).

2,258 citations

Journal ArticleDOI
TL;DR: During human evolutionary history, there were “trade-offs” between expending time and energy on child-rearing and mating, so both men and women evolved conditional mating strategies guided by cues signaling the circumstances.
Abstract: During human evolutionary history, there were "trade-offs" between expending time and energy on child-rearing and mating, so both men and women evolved conditional mating strategies guided by cues signaling the circumstances. Many short-term matings might be successful for some men; others might try to find and keep a single mate, investing their effort in rearing her offspring. Recent evidence suggests that men with features signaling genetic benefits to offspring should be preferred by women as short-term mates, but there are trade-offs between a mate's genetic fitness and his willingness to help in child-rearing. It is these circumstances and the cues that signal them that underlie the variation in short- and long-term mating strategies between and within the sexes.

1,523 citations

Journal ArticleDOI
TL;DR: In this paper, it was shown that the proportion invested in stocks depends strongly on the proportion of stock funds in the plan and that some investors follow the "1/n" strategy.
Abstract: There is a worldwide trend toward defined contribution saving plans and growing interest in privatized social security plans. In both environments, individuals are given some responsibility to make their own asset-allocation decisions, raising concerns about how well they do at this task. This paper investigates one aspect of the task, namely diversification. It is shown that some investors follow the "1/n strategy": they divide their contributions evenly across the funds offered in the plan. Consistent with this naive notion of diversification, it is found that the proportion invested in stocks depends strongly on the proportion of stock funds in the plan.

1,418 citations