Returns to Australian Investment Newsletter Recommendations

Elizabeth Carson, Raymond da Silva Rosa and Richard Maynier
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Elizabeth Carson: Faculty of Economics & Commerce, The University of New South Wales, UNSW, Sydney, NSW 2052.
Raymond da Silva Rosa: UWA Business School, The University of Western Australia, Nedlands, WA 6009.
Richard Maynier: UWA Business School, The University of Western Australia, Nedlands, WA 6009.

Australian Journal of Management, 2004, vol. 29, issue 1, 65-85

Abstract: We investigate the recommendations made by four high profile Australian investment newsletters during 2001. Five issues are investigated: (1) The clarity of newsletter recommendations; (2) the return that might have been earned by following newsletter recommendations; (3) the liquidity of shares recommended; (4) the relative success of recommendations on small, medium and large stocks; and (5) the extent newsletters make recommendations consistent with momentum and contrarian investing strategies. We find that newsletters contain a varying mix of clear and less clear recommendations. The clear recommendations we evaluated earned exceptionally high return, relative to control samples matched on size and holding period and relative to the ASX300 index. The exceptional performance was driven by recommendations on stocks ranked outside the top 150, by market capitalization, and was consistent with a momentum based selection strategy.

Keywords: INVESTMENT NEWSLETTERS; MARKET EFFICIENCY; SHARE RETURNS (search for similar items in EconPapers)
Date: 2004
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:29:y:2004:i:1:p:65-85

DOI: 10.1177/031289620402900110

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