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This effect is strongest in small stocks, and stocks that have performed poorly over the past year.
We argue that, because investors are less likely to bid up (down) a stock price if a stock’s 52-week high occurred in the recent (distant) past, these stocks are underpriced (overpriced) and earn higher (lower) future returns.
This outperformance is mainly driven by stocks that are relatively underpriced but are also exposed to greater downside risk.
Journal ArticleDOI
Julia Chou, Praveen Das, S. P. Uma Rao 
10 May 2011-Managerial Finance
14 Citations
It was found that large stocks have a significant value premium only in January and this high January value premium among large stocks is mainly driven by loser stocks at the turn of the year.
They sell more poorly performing stocks during the fourth quarter than the first 3 quarters of the year, and such trading behavior is more pronounced for institutions whose stocks on average have underperformed the market.
While healthcare stocks are likely to remain at the top of Wall Street's list of favorites, healthcare analysts and money managers say they don't expect to see the same quality of healthcare companies issuing stock the rest of the year.
For example, the U. S. economy has been in slowdown mode since the early 2000s and some analysts argue that defensive stocks, like healthcare, should perform better in these conditions.
Thus, these firms’ stocks are less likely to crash.
We identify two major reasons for the failure of value investing: (1) accounting deficiencies causing systematic misidentification of value, and particularly of glamour (growth) stocks, and (2) fundamental economic developments which slowed down significantly the reshuffling of value and glamour stocks (mean reversion) which drove the erstwhile gains from the value strategy.
The discount is apparent in downward price shifts before the year-end, and upward price shifts at the turn of the year that are significantly correlated with the simultaneous returns to small stocks, and that cannot reflect tax-loss selling.

Related Questions

What are uncertainties in the healthcare sector?5 answersUncertainties in the healthcare sector arise from various factors such as the characteristics of the health services market, the subjective perception of ignorance, and the constantly changing nature of evidence generated by medical testing. These uncertainties can have significant impacts on decision-making processes and investments in healthcare. The measurement and quantification of uncertainty in the healthcare market is possible, and it can lead to a higher level of knowledge, lower costs, and less risky investments. Uncertainty in clinical medicine can lead to underconfidence and overconfidence, both of which can result in unnecessary investigations and difficulty in decision-making. Healthcare professionals need to adopt an "ecological" attitude, considering both analytical decision models and intuitive ones, and involving patients in the decision-making process to better manage uncertainty. Decision makers in healthcare organizations are uncertain about future financing, shortage of care professionals, and other unforeseen circumstances, and lack approaches to deal with deep uncertainties. Medical testing, while promising diagnostic certainty, also generates uncertainties due to the constantly changing nature of evidence, challenging the premise of establishing certainty in medical practice.
What are the biggest problems in the healthcare industry?5 answersThe biggest problems in the healthcare industry include inadequate health facilities/structure, poor human resources and management, poor remuneration and motivation, lack of fair and sustainable healthcare financing, unequal economic and political relations, corruption, illiteracy, very low government spending on health, high out-of-pocket expenditure in health, the absence of an integrated system for disease prevention, surveillance and treatment, inadequate mechanisms for families to access healthcare, shortage of basic and essential equipment in most public health facilities, increase in cybersecurity threats, inability to align hospital capacity with patient demand, suboptimal scheduling practices, medical errors, functional inefficiency, increasing cost of healthcare, poor morale and public perception, and poor safety measures for healthcare workers.
What are the biggest financial issues facing the US healthcare system?5 answersThe biggest financial issues facing the US healthcare system include the high cost of healthcare, the lack of coverage for millions of people, and the unsustainable nature of government-sponsored programs. The US spends a significant amount on healthcare, but its performance is disappointing. The rising healthcare costs are outpacing economic growth, and the US spends a higher percentage of its GDP on healthcare compared to other countries. Additionally, the lack of coverage leaves many individuals without access to healthcare services, compromising equity and responsiveness. The government-sponsored programs are facing financial challenges and may not be sustainable without immediate support from both the government and private insurers. These financial issues highlight the need for comprehensive solutions that involve a proper mix of public and private contributions, both in delivery and financing.
What is the role of finance in today’s healthcare organizations?3 answersFinance plays a crucial role in today's healthcare organizations. It is responsible for the management and allocation of funds within the healthcare system. The way a health system is organized and financed determines access to essential healthcare and improves population health. Financial management within the medical management is important as healthcare costs a lot of money. Nonprofit organizations (NPOs) also face financial pressure and need financial strategies beyond traditional fundraising to manage cash flow efficiently. In healthcare organizations, financial management involves accounting, cash flow analysis, financial statement analysis, budgeting, and variance analysis. Overall, finance is essential for ensuring equitable access to healthcare, protecting against catastrophic costs, and managing the financial stability of healthcare organizations.
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