Mad Money stock recommendations: market reaction and performance

Keasler, Terrill R.; McNeil, Chris R.

doi:10.1007/s12197-008-9033-7

Cited by 38 publications

(27 citation statements)

References 26 publications

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“…Theoretical foundation of such a pattern (overreaction on private information followed by a correction) is presented in Daniel et al (1998) and Aggarwal and Wu (2006). Our findings are also consistent with prior studies such as Neumann and Kenny (2007) and Keasler and McNeil (2010) that document a significant stock price drop after media hype. We also find that a higher disagreement among posters on day t predicts a price drop on the next day (β=−0.155, t ‐stat =−2.37).…”

Section: Short‐term Effects Of Online Posting Activities On Tradinsupporting

confidence: 89%

Do Internet Stock Message Boards Influence Trading? Evidence from Heavily Discussed Stocks with No Fundamental News

Sabherwal

Sarkar

Zhang

2011

Business Fin & Account

123

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This study extends the literature on the information content of stock message boards. To better understand the effect of online postings on trading activities and reduce the error due to stocks with small message board followings, we examine stocks with no fundamental news and high message posting activity. Such stocks tend to be of small firms with weak financials. For those stocks, we find a two-day pump followed by a two-day dump manipulation pattern among online traders, which suggests that an online stock message board can be used as a herding device to temporarily drive up stock prices. We also find that online traders' credit-weighted sentiment index, but not the number of postings, is positively associated with contemporaneous return and negatively predicts the return next day and two days later. Also, absolute sentiment is negatively related with contemporaneous and next day's intraday volatility and positively related with the proportion of volume in small-sized trades. We conclude that message board sentiment is an important predictor of trading-related activities.

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Section: Short‐term Effects Of Online Posting Activities On Tradinsupporting

confidence: 89%

Do Internet Stock Message Boards Influence Trading? Evidence from Heavily Discussed Stocks with No Fundamental News

Sabherwal

Sarkar

Zhang

2011

Business Fin & Account

123

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“…Regarding televised media, Engelberg et al (2012) show that CNBC's "Mad Money" announcements lead to large overnight returns that reverse themselves in the coming months, which is consistent with the general observations of Fama (1998). Keasler and McNeil (2010), in an event study, find no significant, long-term, market-beating impact from watching "Mad Money," especially during the "Lightening Round." This finding aligns with that of a study by Pari (1987) about stock recommendations announced on the (late) Louis Rukeyser's "Wall $treet Week."…”

Section: Introductionsupporting

confidence: 76%

A Portfolio Perspective on Fortune Magazine’s “World’s Most Admired” Companies

2019

JAF

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We examine Fortune Magazine's "World's Most Admired Companies" for information content among the highest-ranked 50 companies from 2006 through 2018. We use one-year out-of-sample tests across the top three, top five, top ten, top 25, and all 50 stocks in the search for information content. We also examine an application of Modern Portfolio Theory (MPT). With the exception of the MPT application, we are unable to find convincing statistical evidence of information content, especially when considering taxes, brokerage fees, and asset-under-management charges, results that stand in contrast to those in the literature.

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“…Existing research indicates that increased turnover could reflect an increase in information asymmetry (Kim and Verecchia, 1991, 1994; He and Wang, 1995) or an increase in the heterogeneity of beliefs (Scheinkman and Xiong, 2004). One way to assess whether the increased turnover results from traders that market makers feel are uninformed noise traders is to look at bid‐ask spreads (Keasler and McNeil, 2010). For our sample, relative bid‐ask spreads average 28 basis points on t = 0 and t + 1.…”

Section: Buy Recommendation Announcement Effectsmentioning

confidence: 99%

Do Investment Newsletters Move Markets?

Brown¹,

Cao-Alvira²,

Powers

2013

Financial Management

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We analyze the market impact of stock recommendations made by a single investment newsletter that focuses on instances of heavy insider trading. The market reacts positively to the actual insider trades and the associated Form 4 Securities and Exchange Commission (SEC) filings that attracted the newsletter's interest. The subsequent recommendations, which occur within a delay of several days, are associated with an even larger announcement period return and higher trade volume. Thus, despite the fact that recommendations are largely based on publicly available information on insider trades and the reach of the newsletter is limited, the newsletter has a significant impact on the market.

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Mad Money stock recommendations: market reaction and performance

Abstract: Stock Recommendations, Mad Money , Price Pressure, Abnormal Returns, G11, G14,

Cited by 38 publications

References 26 publications

Do Internet Stock Message Boards Influence Trading? Evidence from Heavily Discussed Stocks with No Fundamental News

Do Internet Stock Message Boards Influence Trading? Evidence from Heavily Discussed Stocks with No Fundamental News

A Portfolio Perspective on Fortune Magazine’s “World’s Most Admired” Companies

Do Investment Newsletters Move Markets?

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