Investment Advice Research Articles

Can ChatGPT assist in picking stocks?

This paper studies whether ChatGPT-4 with access to the internet is able to provide valuable investment advice and evaluate financial information in a timely manner. Using a live experiment, we find a positive correlation between ChatGPT-4 ratings and future earnings announcements and stock returns. We find evidence that ChatGPT-4 adjusts ratings in response to earnings surprises and news events information in a timely manner. An investment strategy based on “attractiveness ratings” by ChatGPT-4 yields positive returns.

Behavioral biases and the rational decision-making process of financial professionals: significant factors that determine the future of the financial market

PurposeThis paper describes how financial professionals' behavioral biases influence their financial forecast and decision-making process. Most of the earlier studies are focused on well-developed financial markets, and little is researched about financial professionals, such as institutional investors, portfolio managers, investment advisors, financial analysts, etc., in emerging markets.Design/methodology/approachAn expert-validated questionnaire measure four prominent behavioral biases and Indian financial professionals' rational decision-making process. The final sample consists of 274 valid responses using the purposive sampling technique. IBM SPSS and AMOS structural equation modeling (SEM) software are used to build measurement and structural models, multivariate analysis including regression, factor analysis, etc.FindingsThe results provide empirical insights into the relationship between behavioral biases and the decision-making process. The results suggest that the structural path model closely fits the sample data. The presence of behavioral biases indicates that financial professionals' forecasting and decision-making is not always rational but bounded rational or irrational due to these factors. Furthermore, these biases (except overconfidence bias) have a markedly significant and positive relationship with irrational decision-making.Research limitations/implicationsIt is critical to eradicate these psychological errors, but awareness and attentiveness toward behavioral biases may help financial professionals to make informed decisions. Investors can improve their portfolio decisions and investments by recognizing their judgment errors and focusing on specific investment strategies to mitigate the impact of these biases. It is necessary to incorporate behavioral insights while developing training techniques for financial professionals. Rules of thumb, visual tools, financial coaching and implementing social-cultural elements in training programs enable financial professionals to develop simple, engaging, appealing and customized approaches for their clients.Originality/valueThis novel study is the first of this kind of research that examines the relationship between financial professionals' behavioral biases and rational decision-making process. This study significantly and remarkably provides insights into irrationality in financial professionals' decision-making.

Exploring the investors' awareness and decision-making in the context of mutual funds and SIP

This research delves into the realm of investor awareness and decision-making within the context of mutual funds and Systematic Investment Plans (SIPs). In an era characterized by financial complexity and a continually evolving array of investment options, there arises an imperative need to comprehend the dynamics that underlie investors' decision-making processes. Our study is dedicated to unveiling the factors that contribute to investor awareness and the key elements that influence their choices in the realm of mutual fund investments and SIPs. Employing a comprehensive questionnaire, we collect insights from a diverse cohort of investors, with the objective of capturing their levels of knowledge, their preferences, and the extent to which various communication channels impact their investment decisions. The discoveries arising from this research hold the promise of providing invaluable insights to financial institutions, investment advisors, and policymakers. By gaining a deeper understanding of the investor's perspective, we aim to enhance financial literacy, customize marketing strategies, and refine the dissemination of information pertaining to mutual funds and SIPs. This, in turn, can empower investors to make well-informed decisions, foster responsible investment practices, and contribute to the overall development of the financial market.

AN ANALYSIS OF INDIVIDUAL INVESTORS’ BEHAVIOR: A CASE OF THE DHAKA STOCK EXCHANGE

The objective of this research is to ascertain the factors associated with financial indicators, independent sources of information, financial necessities, advocate recommendations, and personal reputation/firm reputation compliance that can influence the behavior of the Dhaka Stock Exchange (DSE) individual investors. The research was carried out by questionnaire method. The survey was conducted with 300 investors trading on DSE. The survey includes only gender as a demographic factor of the participants, 5 main variables, and 27 sub-factors related to them. The obtained data were analyzed with SPSS 26 program. In the research, descriptive analysis was used to achieve the research objective. The findings of the research present that financial indicators, independent sources of information, and personal reputation/firm reputation compliance have a significant impact while financial necessities have a moderate impact, and advocate recommendations have very little impact on DSE individual investors’ behavior. The research provides guidance to individual investors, firms, policymakers, and investment advisors.

The Field of Investment Advice: The Social Forces That Govern Equity Analysts

ABSTRACT Literature on equity analysts presents a conundrum: analysts are seen as influential market participants, yet researchers widely criticize them for their bias and inaccuracy. Studies drawing from economic frames struggle to explain this. Therefore, we develop a new conceptualization that positions analysts as actors operating in a social field. Drawing on a qualitative study involving 70 interviews with analysts and portfolio managers, we offer two broad insights. First, we identify long-term interpersonal and interinstitutional ties between buy-side and sell-side actors which contribute to social inertia in the field. Second, we illustrate how sell-side analysts’ social environment is dichotomous, pushing some to converge with consensus estimates, while encouraging others to diverge. Taken as a whole, our findings contribute to the accounting literature by enriching our understanding of the social and institutional forces that govern analyst behavior.

A SMART SHARIAH-BASED DECISION-MAKING IN ISLAMIC FINTECH

This paper investigates the development of a robo advisor in Islamic fintech institutions that incorporates Shariah-based decision making. The WOS and Scopus databases were used to collect data from the literature review, which was conducted using multiple keywords. Shariah-based decision making is an important component of Islamic finance, and the creation of a shariah robo-advisor can assist investors in making investment decisions that are consistent with their values. Investment decisions and objectives should be aligned with shariah principles and the user's values. Shariah screening criteria entail identifying industries that are haram (forbidden) under Islamic law and industries that are halal (permissible). The algorithm for a shariah robo-advisor was designed to screen investments based on shariah principles and provide investment advice that aligns with the user's investment objectives while taking factors such as the company's source of income, the nature of the business, and the use of debt in the company's operations into account. By bringing the framework of shariah to the forefront of technology, and Islamic Finance studies through an interdisciplinary approach, it is not a fey subject. This analysis, on the other hand, revealed that proposing a new development of a shariah robo-advisor involves several important steps, including defining investment objectives, developing shariah screening criteria, designing the algorithm, testing the algorithm, and launching the robo-advisor from the Malaysian Islamic Fintech context was still unexplored and merited more attention, given its potential benefits.

How risky is your retirement income risk model?


 
 
 Adequately sustaining lifetime income is a critical portfolio objective for retired investors. This article provides a brief review of various retirement income modeling approaches including historical back testing, Monte Carlo simulations, and other more advanced risk modeling techniques. Implau- sible assumptions underlying common risk models may mislead investors concerning the risk and return expectations of their retirement investment strategies. We compare risk models, evaluate their credibility, and demonstrate how an oversimplified model may distort the risks retired investors face. Differences in sustainability rates are stark: 4% failure at the low end versus 49% failure at the high end. The article ends with general comments regarding model risk and practitioner investment advice.
 
 

The crypto frontier: How US policymakers and investment advisers can address digital assets

This paper focuses on prominent issues surrounding digital assets. The lack of a comprehensive federal digital asset law has recently raised several issues for Securities and Exchange Commission (SEC)-registered investment advisers as they try to navigate new markets and new industry practices. As such, this paper addresses the current US regulatory landscape, provides a comparison of non-US approaches to digital assets and provides US policymakers with key principles they can consider for potential digital asset legislation and/or regulation. The paper also provides compliance considerations for investment advisers who currently manage digital assets, to address the evolving obligations under the US securities laws.

The service attributes of robo-advisors: a choice-based conjoint analysis

PurposeAs an alternative to hiring financial specialists or investment consultants, robo-advisors offer financially automated investment services. This study aims to investigate how robo-advisors' service attributes, risk attitude and financial self-efficacy influence customers' choice preferences of adopting robo-advisors.Design/methodology/approachTwo hundred fifty-one online surveys were used to collect data, and choice-based conjoint analysis was conducted.FindingsResults show that increasing annual fees negatively impact customers' choice preferences. Promotion, general investment education and additional human assistance have a positive impact. Furthermore, risk-seeking and risk-averse customers require more human assistance than risk-neutral customer and customers with high levels of financial self-efficacy prefer more general investment education and additional human assistance than those with lower levels. In addition, customers in the older age group prefer promotion, general investment education and additional human assistance, while wealthy customers prefer lower annual fees, higher general investment education and more additional human assistance compared to middle-class and low-income groups.Originality/valueThis study contributes to robo-advisor providers to provide appropriate service attributes for each customer group.

Siyasi ve Ekonomik Gelişmelerin BİST Yatırımcı Kararlarına Etkisi: Türkiye’den Kanıtlar

The aim of this study is to determine whether political and economic developments have an effect on the current investment decisions of BIST investors. According to the results of the study, H1, H2 and H4 hypotheses, which measure the effect of investment advice, election and presidential debates, and economic and political explanations on investors' investment decisions, were accepted, while H3, H5, hypotheses that measure the variables of self-efficacy and the state of the stock market were rejected. Among these three variables, it was seen that the economic and political explanations (0.432) affected the investment decisions of the investors the most, followed by the election and presidential debates (0.226). It was understood that investment recommendations affected the third place (0.130).

Analysis of Tesla's Financial Status and Investment Advice, a Comparative Analysis of Toyota, BYD, and TESLA

At this stage, the automotive field has ushered in a new market, new-energy vehicles. To a certain extent, the carbon emissions of petrol vehicles have contributed to the environmental problem of global warming. Therefore, people are paying more and more attention to electric cars, and their willingness to purchase is also significantly improved. This paper will focus on the SWOT analysis of Tesla, a representative electric car company, analyze its financial status in the past five years and deeply explore the advantages of Tesla compared with other electric car companies and traditional oil car companies, to provide investors with reference data. The analysis found that Tesla currently has more advantages than disadvantages. Compared with the current opportunities, the company should pay attention to more threats it may face in the future. From the perspective of profitability, operating ability, solvency and investment ability, Tesla's trend in the past five years is very impressive. Compared with Toyota in the stable stage and BYD in the early stage of development, Tesla's current financial situation has more room for development and has always maintained substantial growth. But in the next period, it will inevitably face a variety of market competition.

Research on the Private Banks Centralized Management Systems in China

China Merchants Bank's private banking development has always occupied first place in China for nearly 10 years. Its centralized management system for the private bank division is worth learning from. This paper focuses on the Chinese private bank centralized management system, and from the comparison with the decentralized management systems in other Chinese commercial banks, such as ICBC and the Bank of China, analyzes the advantages of the centralized one. From the comparison, this study finds the AUM of China Merchants bank is much higher than ICBC and the Bank of China [1], and the assets per household are two times higher than the other two, indicating that China Merchants bank's clients hold more sickness than the other two. Based on the core idea of the three processes of value creation, value transmission, and value capture [2] and the development process of the China Merchants Bank, this study proposes the centralized management model for the private bank. In conclusion, this study indicates that centralized management systems have advantages over decentralized modes in the long run. To reform the decentralized systems, the model suggests centralizing the research team, database and digital platform, and managers assessment, which can create more professional investment advice, higher working efficiency, and different holding stages services.

Shareholder Proposals and Sustainability: An Empirically-Based Critical Reflection

Abstract 276 Publicly traded companies face growing scrutiny in respect of their sustainability strategies and policies from regulators, the general public, NGOs, as well as investors. One area where the attention for corporate sustainability issues has materialised is at the general meetings of these companies, including in the form of a growing number of shareholder proposals on environmental and social topics. Against the background of this development, I have investigated sustainability-related shareholder proposals in 25 countries. More specifically, this paper presents the results of a survey of shareholder proposals on environmental and social topics that have been put to a vote in the period between 2020 and 2022, with the aim of exploring what sustainability issues are addressed through shareholder proposals, who submit E&S-related shareholder proposals, and which sectors are subjected to such proposals. During this three-year period, nearly one-third of the 1995 shareholder proposal that have been identified directly related to environmental and social issues. The investigation reveals that the majority of such proposals have been submitted by individuals, organisations with primarily social objectives, and SRI asset managers and investment advisors. But in light of increasing attention, both in society and in investor circles, for what institutional investors are doing to support and promote sustainability strategies and policies of publicly traded companies, in particular when it comes to climate change, it may be the case that (some of) these investors will increasingly exercise agenda-setting rights in connection with corporate sustainability issues. 277

Investor profiles


 
 
 Women in the United States face numerous financial challenges: They typically earn less than men do; they have greater probabilities of living in poverty; and they need substantial retirement funds, given their average longevity. Consequently, a comprehensive understanding of how women use investment advice to remedy these challenges is vital. However, the literature is largely mute on this issue. This study helps to fill this gap in the literature by evaluating two profiles of female investors through cluster analysis and logistic regression conducted on a large, nationally representative database collected recently. Predictors of seeking investment advice vary considerably across profiles.
 
 

Maintaining High Integrity and Ethical Practices as an Investment Adviser

In finance, unethical behavior is a regular occurrence. Across History, and most notably the 2008 financial crisis, the age of risk-taking and profit maximization has been at the forefront of financial firms' and institutions' minds beyond the prioritization of integrity. Through the literature review, I researched this conversation to reveal the leading unethical practices that have arisen in the investment advisory industry. The main ethical problems include but are not limited to compensation, corporate culture, and risk-taking. In the scholarly conversation, articles bypass coming to a standard narrative that helps present a solution to these problems. Establishing my research question, “How can Investment Advisers in the United States most effectively promote ethical behavior beyond having good intentions alone?” Semi-structured interviews with six investment advisers were used to accomplish this best. Then a thematic analysis was used, with the most common themes being acting voluntarily, establishing a moral framework, and fostering knowledge through mentorship and experience. After the conversation of these themes, I present a standard narrative. From establishing the themes such as ethical obligation and knowledge, virtue ethics, an ancient philosophy coined by Aristotle in his book “The Nicomachean Ethics,” which encompasses moral and intellectual virtues, will most effectively bridge the absence of ethics in the industry. It is an advanced moral perspective young advisers usually do not have; therefore, researchers must study the role of virtue ethics in the industry and its implications.

Which Investors Matter for Equity Valuations and Expected Returns?

Abstract Based on an asset demand system, we develop a framework to quantify the impact of market trends and changes in regulation on asset prices, price informativeness, and the wealth distribution. Our leading applications are the transition from active to passive investment management and climate-induced shifts in asset demand. The transition from active to passive investment management had a large impact on equity prices but a small impact on price informativeness because capital did not flow from more to less informed investors on average. This finding is based on a new measure of investor-level informativeness that identifies which investors are more informed about future profitability. Climate-induced shifts in asset demand have a potentially large impact on equity prices and the wealth distribution, implying capital gains for passive investment advisors, pension funds, insurance companies, and private banking and capital losses for active investment advisors and hedge funds.

A Wealth and Investment Primer for Plastic Surgeons: The Two Pillar Framework.

Sound investing, analogous to maintaining good health, is a long-term process that must be continuously nurtured and strengthened. This article will describe how adhering to a simple, two-pillar framework can help plastic surgeons secure superior wealth generation. Our first pillar is anchored on developing a consistent savings plan geared to circumstances and lifestyle goals at each career stage. Each plastic surgeon's path is unique, but there are common drivers based on substantial upfront educational costs and high life-time wage incomes. The second pillar is focused on generating strong after-tax investment performance over many market cycles. This primer presents pragmatic steps plastic surgeons should consider for financial planning, approaching capital markets, and selecting advisors. Strong financial planning, combined with a more active and transparent investing approach, can deliver superior financial outcomes. This is an introduction only focused on investing in public securities versus illiquid assets (an asset that cannot be converted to cash in a short period, usually defined as less than 7 days, like real estate or art collectibles, for instance) and is not meant to be exhaustive or constitute investment advice regarding any asset class, strategy, or examples cited herein.

Automation of the Individualized Investing Strategy for an Investment Advisor Established by a Semi-Markov Regime-Switching Model

Automation of the Individualized Investing Strategy for an Investment Advisor Established by a Semi-Markov Regime-Switching Model

Impact of Political Agendas & Monetary Policy on Asset Prices

The free flow of capital and the interconnectedness of the global financial system have made the United States the center of the global capital market, and the Fed's policy adjustments have significant impacts on asset prices and market liquidity worldwide. This paper aims to verify the spillover effects and transmission channels of the Fed's monetary policy through a literature review, curve fitting, qualitative and empirical analysis. The results confirm the existence of spillover effects and identify four different ways in which the Fed's monetary policy affects the Chinese and US capital markets. The paper concludes by giving investment advice in response to the approaching monetary policy expectations of the Fed and the outbreak of global economic recovery. The pandemic has caused major central banks to conduct non-normalized easing operations, leading to a significant rise in global asset prices. The paper also explores China's reaction to the Fed's monetary policy in different periods and its implications for individual investors and government management of the financial market. As the world gradually returns to normal with the progress of vaccination, the paper hopes for a calm and orderly capital market.

Legality of usage of Artificial Intelligence and Machine Learnings by Share Market Intermediary

Artificial Intelligence (AI) and Machine Learning (ML) are increasingly utilized in share market services due to significant efficiencies and benefits for companies and investors across the globe. This has resulted in an alteration in the firm’s business models and has a potential impact on the effectiveness of the share market and could harm investors. Indian share market is also witnessing the usage of this technology by market intermediaries. The present regulatory framework of Securities Exchange Board of India (SEBI) on share market intermediaries is not dealing with the Fintech/ technology 2.0-based products and services offered in retail trading and investment advisor platforms in India. The research is primarily based on the normative method presenting a qualitative analysis of the usage of AI & ML in various business models by share market intermediaries. How various share market regulators are addressing and regulating this technology usage and their judicial exposition. The paper concludes that the Indian share market is no exception & SEBI require to look at this new transformation and address the challenges posed by it. SEBI needs to take a proactive step to promote, guide & regulate usages of AI & ML which is gradually seeking the attention of Indian share market intermediaries into their business models and get the maximum benefit out of these technologies.