Showing papers in "Financial Analysts Journal in 1975"
TL;DR: In this paper, Fact and Fantasy in the Use of Options: Fact and fantasy in the use of options, the authors present a survey of options and their use in financial markets.
Abstract: (1975). Fact and Fantasy in the Use of Options. Financial Analysts Journal: Vol. 31, No. 4, pp. 36-41, 61-72.
988 citations
TL;DR: In this article, the likely gains from market timing were discussed. But they did not consider the effect of market timings on the stock market's performance, and they focused on the early 1970s.
Abstract: (1975). Likely Gains from Market Timing. Financial Analysts Journal: Vol. 31, No. 2, pp. 60-69.
133 citations
TL;DR: In this paper, the effect of risk on the spread of the market maker's spread has been investigated, and the authors conclude that risk is a major determinant of the spread.
Abstract: (1975). The Effect of Risk on the Market Maker’s Spread. Financial Analysts Journal: Vol. 31, No. 6, pp. 45-49.
44 citations
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TL;DR: In this paper, the authors argue that professional money management has become a Loser's Game, i.e., a game one wins by avoiding mistakes rather than by positive achievement, and that those players who assume they are playing a Winner's Game meet only with frustration.
Abstract: During the last ten years, professional money management has become a Loser's Game—i.e., a game one wins by avoiding mistakes rather than by positive achievement. As in other Loser's Games, those players who assume they are playing a Winner's Game meet only with frustration. Drawing examples from tennis, golf, and war, the author offers advice on how to win the money game.
38 citations
TL;DR: In this article, how promptly do corporations disclose their problems is investigated and the authors propose a method to find out when a company is lying to the public: "How Promptly Do Corporations Disclose Their Problems? Financial Analysts Journal: Vol. 31, No. 5, pp. 55-61".
Abstract: (1975). How Promptly Do Corporations Disclose Their Problems? Financial Analysts Journal: Vol. 31, No. 5, pp. 55-61.
37 citations
TL;DR: In this article, the authors discuss the implications of homogeneous stock groupings for portfolio management, and present a method for selecting the most appropriate stock groups for a given portfolio with respect to the stock market.
Abstract: (1975). Homogeneous Stock Groupings: Implications for Portfolio Management. Financial Analysts Journal: Vol. 31, No. 3, pp. 50-62.
29 citations
29 citations
TL;DR: Weil et al. as mentioned in this paper analyzed the likely income statement effects of recording inflation adjustments and concluded that the current cost approach is conceptually superior (and presents more meaningful statements) in their view, but the general price level approach has received authoritative support because of its greater objectivity and auditability.
Abstract: The most significant and persistent complaint about published financial statements in recent years has been that they do not recognize the economic facts of life. Inflation is a reality throughout the world, yet its effects go unrecognized in financial statements prepared in accordance with generally accepted accounting principles in the United States and in most of the other countries of the Western World. Inflation distorts all financial statements, but primary attention in the many public discussions of this topic is usually focused on the way inflation affects reported income. This article analyzes the likely income statement effects of recording inflation adjustments. Two different approaches to adjusting for inflation have been suggested in the accounting literature. One substitutes for the recorded historical cost data of each of the items in the financial statements the current cost. The other adjusts the recorded historical cost data for changes in the value of the monetary unit since each item was acquired. The former deals with specific price changes of individual items, the latter with changes in the general price level. Since most adjustments are made by the use of price indexes, the first approach relies on indexes of specific prices, the second on an index of the general price level. The appendix of this article explains and illustrates the essentials of both approaches. The current cost approach is conceptually superior (and presents more meaningful statements) in our view, but the general price-level approach has received authoritative support because of its greater objectivity and auditability. In both the United States and the United Kingdom, the authoritative accounting bodies are currently considering the question of general price-level adjusted financial statements and may issue pronouncements requiring their publication in the near future. In both countries, the general pricelevel statements would be supplemental to the conventional unadjusted historical cost statements. 1 Since general price-level adjusted statements are likely to be the only adjustments for inflation with official sanction, the rest of the body of this article is concerned with the effect of such adjustments on reported earnings. (Some of the results of using current cost adjustments are illustrated in the appendix.) In the remaining sections we analyze the effects of general price-level adjustments on the 30 Sidney Davidson, Arthur Young Professor of Accounting, University of Chicago, is currently on leave as a Fellow of the Center for Advanced Study in the Behavioral Sciences, Stanford, California. Roman L. Weil is Mills B. Lane Professor of Industrial Management, Georgia Institute of Technology. The authors thank Christine Ciarfalia and Samy Sidky for their research assistance and the Ford Foundation Faculty Research Fund of the Graduate School of Business of the University of Chicago and the National Science Foundation for research support. They thank Richard M. Cyert, Yuji Ijiri, and Mary Peeler for various kinds of help. 1. Footnotes appear at end of article. (Pp. 83-84)
27 citations
TL;DR: Using Modern Portfolio Theory to Maintain an Efficiently Diversified Portfolio as discussed by the authors was used to maintain an efficient and diversified portfolio in the early 1970s, and it has been successfully applied to a variety of problems.
Abstract: (1975). Using Modern Portfolio Theory to Maintain an Efficiently Diversified Portfolio. Financial Analysts Journal: Vol. 31, No. 3, pp. 73-85.
20 citations
TL;DR: In this article, the authors present a portfolio diversification strategy based on portfolio mining, which they call Portfolio Diversification Strategies (PDSSS), and evaluate the performance of the strategy.
Abstract: (1975). Portfolio Diversification Strategies. Financial Analysts Journal: Vol. 31, No. 3, pp. 86-88.
18 citations
TL;DR: In this article, the authors proposed a method to reduce the cost of stock trading by reducing the number of shares traded in a stock market session and reducing the price of stock trades.
Abstract: (1975). Reducing the Cost of Stock Trading. Financial Analysts Journal: Vol. 31, No. 6, pp. 35-44.
TL;DR: In this paper, risk and return in CBOE and AMEX option trading are discussed. But the authors focus on the AMEX market and do not consider the CBOE market.
Abstract: (1975). Risk and Return in CBOE and AMEX Option Trading. Financial Analysts Journal: Vol. 31, No. 4, pp. 42-52.
TL;DR: In this paper, the difference between internal and external market efficiency is discussed, and the differences between the two types of market efficiency are compared in the context of financial analysis and finance.
Abstract: (1975). On the Difference between Internal and External Market Efficiency. Financial Analysts Journal: Vol. 31, No. 6, pp. 30-34.
TL;DR: The money supply and the stock market: The Demise of a Leading Indicator as mentioned in this paper was a leading indicator of economic growth in the 1970s and early 1980s, and it has been shown to be unstable.
Abstract: (1975). The Money Supply and the Stock Market: The Demise of a Leading Indicator. Financial Analysts Journal: Vol. 31, No. 5, pp. 18-26, 76.
TL;DR: The Treynor-Black Model (TBM) as discussed by the authors is an idealized view of the investment world whose premises include some fairly unrealistic assumptions, and it offers the professional investor a new framework for viewing the investment process that can lead to a better understanding of the roles of various investment professionals and more effective decision making.
Abstract: The Treynor-Black Model (TBM) is an idealized view of the investment world whose premises include some fairly unrealistic assumptions. Nevertheless, it offers the professional investor a new framework for viewing the investment process that can lead to a better understanding of the roles of various investment professionals (such as security analysts and portfolio managers) and more effective decision making. TBM is based on the premise that investors like return and dislike risk. This view is probably consistent with the feelings of most investors although they may not agree on the definition of risk and the criterion they use to determine the attractiveness of a particular return-risk tradeoff. The definition of risk used in TBM is a measure of the variability of return called the standard deviation of return (to save space it will be denoted by the symbol ain what follows). Many investors may prefer other measures of risk, such as downside potential or the sensitivity of a portfolio (or security) to fluctuations of the market (beta, denoted by ,8). Most useful measures of risk are highly correlated with o-, and investors who prefer them can think of aas a proxy that will rank portfolios in about the same way as their own measure of risk. The definition of portfolio attractiveness used in TBM is based on a measure (denoted by P) introduced by Professor William F. Sharpe. The numerator (the top part) of this fractional measure is the amount by which_the expected return of the portfolio (denoted by Rp) exceeds the riskless rate of interest (RF). The denominator (the bottom part) is the risk of the portfolio (urp). Symbolically, it is written as
TL;DR: Inflation Accounting: Public Utilities as discussed by the authors, the authors present a taxonomy of public utilities and public utilities in terms of inflation accounting, and present a methodology for public utilities to calculate inflation accounting.
Abstract: (1975). Inflation Accounting: Public Utilities. Financial Analysts Journal: Vol. 31, No. 3, pp. 30-34, 62.
TL;DR: The first statement of accounting principles issued by the Financial Accounting Standards Board (FASB) provides analysts with the opportunity to explore in detail the impact on the financial statements of major multinational corporations of income statement and balance sheet translation of their foreign subsidiaries.
Abstract: The first statement of accounting principles issued by the Financial Accounting Standards Board (FASB) provides analysts with the opportunity to explore in detail the impact on the financial statements of major multinational corporations of income statement and balance sheet translation of their foreign subsidiaries. The combination of floating exchange rates and the importance of multinational corporations earning a significant portion of their income overseas makes necessary an examination of the stability and recurring nature of reported profits from this source. This article analyzes the accounting options available to and used by specific firms with respect to the translation of their foreign income statements and balance sheets.
TL;DR: The Trueblood Report: An Analyst's View as discussed by the authors was the first publication of the Trueblood report, which was published in 1975, and it was reviewed in the Financial Analysts Journal Vol. 31, No. 1, pp. 32-41, 56.
Abstract: (1975). The Trueblood Report: An Analyst’s View. Financial Analysts Journal: Vol. 31, No. 1, pp. 32-41, 56.
TL;DR: In this paper, investment objectives include diversification, risk, and exposure to surprise, and the authors present an investment objective for diversification and risk in the stock market, which they call Diversification Objectives.
Abstract: (1975). Investment Objectives: Diversification, Risk and Exposure to Surprise. Financial Analysts Journal: Vol. 31, No. 2, pp. 42-50.
TL;DR: In this article, accounting determinants of foreign exchange gains and losses are discussed, and the authors propose a method to determine the most appropriate accounting determinant for foreign exchange gain and loss.
Abstract: (1975). Accounting Determinants of Foreign Exchange Gains and Losses. Financial Analysts Journal: Vol. 31, No. 2, pp. 26-30.
TL;DR: The Allocation Fallacy and Financial Analysis as discussed by the authors is a classic example of the allocation fallacy in financial analysis, and it has been studied extensively in the literature since the 1970s.
Abstract: (1975). The Allocation Fallacy and Financial Analysis. Financial Analysts Journal: Vol. 31, No. 5, pp. 37-41, 68.
TL;DR: In this article, the authors discuss competitive rates, market efficiency, and the economics of security analysis in the context of financial analysis, and present an analysis of the relationship between competitive rates and market efficiency.
Abstract: (1975). Competitive Rates, Market Efficiency, and the Economics of Security Analysis. Financial Analysts Journal: Vol. 31, No. 2, pp. 18-24, 92.