Stock Investment Research Articles

COVID-19 pandemic, oil prices and Saudi stock market: empirical evidence from ARDL modeling and Bayer–Hanck cointegration approach

In 2020, the world experienced several significant events, including the coronavirus (COVID-19) pandemic and the collapse of international crude oil prices. The rapid spread of this pandemic has dramatic impacts on financial markets all over the world, thereby increasing market risk aversion in an unprecedented way since the subprime financial crisis. The decline in stock markets implied volatilities of equity and oil prices, thereby heightening turmoil in global financial markets despite comprehensive and substantial financial reforms. To this end, we investigated the likely effects of this pandemic on the Saudi stock market while controlling for oil prices based on daily data for a period from 1/1/2020 to 19/9/2022. To ascertain the existence of a long-run equilibrium relationship between the variables, we applied autoregressive distributed lag (ARDL) modeling and the error correction model, with this ultimately revealing the existence of strong cointegration in the long run. The ARDL bounds test was found to be robust by combined cointegration tests, thus providing further evidence of a strong relationship in the long run. Granger causality tests also yielded evidence of causality between the variables in both directions. The total COVID-19 confirmed cases and oil prices also caused movements in stock returns in the short run. Our findings have some prominent implications for asset managers and policymakers to improve stock market efficiency and boost global economic activity. Saudi authorities can consequently remove the regulatory and legal obstacles to develop their stock market and better improve the risk management, which will allow to make quick decisions in response to any oil price volatilities. Policymakers should also adopt proactive strategies that can comfort stock investors’ anxieties over the increasing oil price volatilities. Finally, the findings should be treated with some cautions because of the limited sample size and the tests’ statistical inference. Nevertheless, they do open opportunities for further studies to look in more detail at how the COVID-19 pandemic affected, over the short and long run, monetary and fiscal policy coordination, financial stability, and various other macroeconomic indicators in Saudi Arabia.

Building a Systematic Innovation Factor in Stock Investing

This paper has several aims. First, it seeks to answer whether a portfolio comprised of top innovators outperforms the S&P 500 index. To achieve this, a strategy was developed to invest long in top innovators based on their ranking, and its performance was compared to that of the broad-based index. Secondly, the paper aims to assess the volatility associated with innovative stocks, given the common belief that higher innovativeness carries higher risk. Additionally, it seeks to analyse the impact of sector factors on the portfolio's performance. Finally, the paper conducts a comparative analysis between the portfolio's performance and that of the ARK Innovation ETF (ARKK), which specifically focuses on investing in companies relevant to the theme of disruptive innovation.© 2024 The Author(s). Published by RITHA Publishing. This article is distributed under the terms of the license CC-BY 4.0., which permits any further distribution in any medium, provided the original work is properly cited.

PERFORMANCE OF DIA AND FORWARD-LOOKING OPTIMAL PORTFOLIOS OF DOW STOCKS

Purpose- This paper compares the performance of DIA, trailing optimal portfolio and forward-looking optimal portfolio constructed from a pool of DOW stocks, applying a modified contrarian portfolio construction to the forward-looking optimization. The modified contrarian optimization of this study is based on the premise that loser stocks, in the short run, would have reversal performance and become winner stocks in the short-run future. The investigative question is: Do forward-looking optimal portfolios of DOW stocks perform better than trailing optimal portfolios of DOW stocks in the short run after DJIA hit the year's lowest point in 2022? Methodology- To answer the investigative question, this study compares the short-run performance of forward-looking optimal portfolios with the performance of trailing optimal portfolios. Elton, Gruber, and Padberg (1987) originally introduced the optimal portfolio technique. Findings- The primary focus was on the case related to September 30, 2022, when DJIA hit the lowest level in 2022. To get the trend analysis of the cases of DJIA hitting the lowest level of the year, this study examined two comparable findings, having examined the performance properties of trailing vs. forward-looking optimal portfolios using the same method. One examined the case related to March 23, 2020, and another examined the case related to December 24, 2018. It finds a robust performance of DIA compared to the performance of two forms of optimal portfolios. It also finds that forward-looking optimal portfolios performed better than trailing optimal portfolios regarding the average performance of three cases. Conclusion- It concludes the potential usefulness of DIA as evidence of the market efficiency of DOW stocks. At the same time, forward-looking optimal portfolios for short-run investment in DOW stocks are a viable alternative to investing in the DIA.

Stock market prediction employing ensemble methods: the Nifty50 index

<span lang="EN-US">Accurately forecasting stock fluctuations can yield high investment returns while minimizing risk. However, market volatility makes these projections unlikely. As a result, stock market data analysis is significant for research. Analysts and researchers have developed various stock price prediction systems to help investors make informed judgments. Extensive studies show that machine learning can anticipate markets by examining stock data. This article proposed and evaluated different ensemble learning techniques such as max voting, bagging, boosting, and stacking to forecast the Nifty50 index efficiently. In addition, an embedded feature selection is performed to choose an optimal set of fundamental indicators as input to the model, and extensive hyperparameter tuning is applied using grid search to each base regressor to enhance performance. Our findings suggest the bagging and stacking ensemble models with random forest (RF) feature selection offer lower error rates. The bagging and stacking regressor model 2 outperformed all other models with the lowest root mean square error (RMSE) of 0.0084 and 0.0085, respectively, showing a better fit of ensemble regressors. Finally, the findings show that machine learning algorithms can help fundamental analyses make stock investment decisions.</span>

Role of Emotions in Stock Investment Decisions : A Critical Review of the Literature

Role of Emotions in Stock Investment Decisions : A Critical Review of the Literature

Analisis Kelayakan Investasi Saham Perusahaan (Studi Kasus Pada PT. Kino Indonesia.TBK)

This research aims to analyze the feasibility of stock investment at PT. Kino Indonesia,Tbk., with growth analysis, profitability, liability and stock valuation. Using the case study method and quantitative approach, the result of the analysis show that the fundamental and profitability of the Company is in bad condition, even though it’s share price is below fair value. Investors are advised to monitor the company's future efforts, to improve their performance. Cause, it’s far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.

Literature Study of Stock Investment Risk Analysis for Beginner Investors

Awareness of investment has been owned by all parties, including young people who unfortunately still do not understand the risks of investment. This can certainly have a negative impact that is far from the expectations or objectives of the investment itself. This article was compiled using a literature review based on the Google Scholar database for the period 2014-2024, with one of the objectives to study the risks often experienced by novice investors. The results of the literature review show that investment decisions whose decision making is ideally rational, but often become irrational and this condition is very relevant to various theories such as the theory of Efficient Market Hypothesis (EMH), the theory of Behavioral Finance, the Theory of Planned Behavior.

Interconnectivity disrupted by fading globalization: a network approach to recent international trade developments

The post-World War II decades experienced rapid growth in international trade, but a trend of weakening globalization has been consolidating recently. We construct the international trade network (ITN) using bilateral trade (2010–2022) to assess how interconnectedness has evolved in the face of recent developments. Our analysis reveals that, while network connectivity initially improved, there has been a shift towards a negative trend since 2018, coinciding with an increasingly unfavorable environment for international trade. We also document significant changes in the roles of countries within the ITN. While the USA remains the primary hub and China solidifies its second position, key countries like Germany, France, Great Britain, and Japan have notably lost relevance, whereas nations like India and the Republic of Korea are gaining prominence. Finally, employing an econometric model, we show that countries with large economies, significant manufacturing sectors, lower inward foreign direct investment stock, and economic and geopolitical stability tend to occupy more central positions in the ITN.

OVERCONFIDENCE BIAS IN INVESTMENT DECISIONS ON INDONESIAN STOCK MARKET

The investor’s growth on the Indonesian Stock Exchange for the period 2020 to January 2023 is quite significant. However, this growth was accompanied by a tendency towards overconfident bias. This behavior’s increase errors in investment decision making: increasing risk and reducing returns. The aim of this research is to verify the relationship between neuroticism, conscientiousness, and openness traits on the overconfidence behavioral bias to stock investors using The Big Five Personality approach. The research uses primary data on stock investors in Indonesia with total 483 respondent. Data analysis method used the SEM-PLS version 4.0. The research results prove that neuroticism and conscientiousness traits have a positive effect on overconfidence bias. Other evidence shows, that openness has a negative effect on overconfidence bias. This evidence applies to both male and female investors.

Legal Protection for Investors Buying and Selling Shares Online and in the Capital Market

This study aims to know and analyze legal protection for investors in terms of buying and selling shares online and to find out and analyze the factors inhibiting the implementation of factors that hinder legal protection for investors in terms of buying and selling shares online. The research method carried out in this study is normative legal research, in this case, using material collection techniques in the form of document and literature studies. The results of this study show the form of legal protection for investors as consumers in Law Number 8 of 1999 concerning Consumer Protection, namely the establishment of BPKN and BPSK. Law Number 8 of 1995 concerning the Capital Market has been regulated regarding the disclosure of information that must be provided to investors, and the regulation of Bapepam-LK as a supervisory body for every activity related to the capital market, which has been transferred to the OJK. Law Number 21 of 2011 concerning the Financial Services Authority aspects of legal protection provided by this law are prevention or preventive efforts and enforcement or repression carried out by the Financial Services Authority. The inhibiting factors faced in carrying out investor protection are still the large number of unlicensed/illegal online stock investments and the lack of knowledge of the investor community related to illegal investments. Research Recommendations It is expected that the government will be able to update Law Number 8 of 1999 concerning Consumer Protection to protect consumers optimally in this era of highly developed technological development. It is expected that in the future, the government will need to regulate online stock investment through a special law. It is expected that in the future, there will be coordination and cooperation between OJK and BPKN / BPSK in ensuring investor (consumer) protection. Investors are expected to be more careful in seeking information and choosing a clear securities company that has obtained permission for its activities. To find out the forms of violations/crimes in capital market transactions and to know the legal protection of investors in capital market transactions. The journal writing method uses normative research with an approach, namely the statutory approach, namely Law Number 8 of 1995 concerning the capital market, the fact approach to alluding to capital practices in Indonesia, and the concept analysis approach to legal analysis. Based on the results of the study, namely: Legal Protection to the Capital Market Supervisory Body Article 4 of Law No. 8 of 1995 concerning the capital market stated that "coaching, regulating, supervising by Bapepam to create orderly, fair, and efficient capital market activities and crimes and violations in the capital market sector will be involved in legal cases, in capital market violations, usually regarding BAPEPAM licensing and registration cases.

The effects of cognitive leisure activities on frailty transitions in older adults in China: a CHARLS-Based longitudinal study.

In an effort to identify factors associated with frailty transitions that trigger a significant difference in preventing and postponing the progression of frailty, questions regarding the role of cognitive leisure activities on various aspects of older adults' health were raised. However, the relationship between cognitive leisure activities and frailty transitions has rarely been studied. A total of 5367 older Chinese adults aged over 60 years from the China Health and Retirement Longitudinal Study (CHARLS) were selected as participants. The 2nd wave of the CHARLS in 2013 was selected as the baseline, and sociodemographic and health-related status baseline data were collected. The FRAIL Scale was used to measure frailty, while cognitive leisure activities were measured by the Cognitive Leisure Activity Index (CLAI) scores, which consisted of playing mahjong or cards, stock investment, and using the internet. After two years of follow-up, frailty transition from baseline was assessed at the 3rd wave of the CHARLS in 2015. Ordinal logistic regression analysis was used to examine the relationship between cognitive leisure activities and frailty transitions. During the two-year follow-up of 5367 participants, the prevalence of frailty that improved, remained the same and worsened was 17.8% (957/5367), 57.5% (3084/5367) and 24.7% (1326/5367), respectively. Among all participants, 79.7% (4276/5367), 19.6% (1054/5367), and 0.7% (37/5367) had CLAI scores of 0, 1, and 2 to 3, respectively. In the univariate analysis, there was a statistically significant association between a score of 2 to 3 on the Cognitive Leisure Activity Index and frailty transitions (odds ratio [OR] = 1.93, 95% CI 0.03 to 1.29, p = .04), while all other covariates were not significantly different across the three groups. After adjusting for covariates, participants with more cognitive leisure activities had a higher risk of frailty improvement than those without cognitive leisure activities (odds ratio [OR] = 1.99, 95% CI 1.05 to 3.76, p = .04). Cognitive leisure activities were positively associated with the risk of frailty improvement in older adults, mainly when participating in multiple such activities. Older adults may be encouraged to participate in a wide variety of cognitive leisure activities to promote healthy aging.

The Effect of Financial Information on Decision Making to Purchase Shares Using the TOPSIS Method (Technique for Order Preference by Similarity to Ideal Solution)

In making stock investment decisions, it is important for investors to perform certain calculations and analyzes in order to be able to assess how well the performance of the issuer (company), with the aim of getting the expected rate of return and being able to minimize investment risk. This study was conducted to find out how the decisions that will be made by investors on buying shares on the Indonesia Stock Exchange using fundamental analysis. The difference between this study and previous research is that it adds a Positive Ideal Solution (PIS) and a Negative Ideal Solution (NIS) from financial information indicators ( Dept to Equity Ratio, Return on Equity, Net Profit Margin, Return On Assets, Earning Per Share, Price Earning Ratio). , and Price Book Value ) using the TOPSIS method. The sample in this study uses securities listed on the Indonesia Stock Exchange as many as 94 securities. The results showed that the Dept to Equity Ratio, Return On Assets, Earning Per Share, Price Earning Ratio, and Price Book Value had a significant effect on stock purchase decisions, while Return on Equity and Net Profit Margin had no effect on stock purchase decisions.

Wealth and familiarity bias: sin stocks investment in Europe

AbstractOur study investigates the relationship between European society’s wealth and how they invest in sin stocks—stocks of listed firms involved in producing tobacco, alcohol, and gambling goods and services returns. Using time series data from 24 European countries from 2000 to 2020 to check the performance of sin stocks, we tested 3 hypotheses to explore the possibility that sin stock returns are related to the wealth of the countries they are based on and to the levels of consumption of alcohol and gambling in those countries. Three quantitative methods are used to measure risk-adjusted returns of the sin stocks: the CAPM single-factor or market model, the Fama-French 3-factor model, and the Fama-French 5-factor model. We found significant evidence of the existence of abnormal returns. The evidence supports that sin stocks have a significant relation with the market, lower volatility, and have better risk-adjusted returns during times of economic downturn. Our results show that sin stocks from the wealthier Northern European countries yield higher risk-adjusted returns than their Southern and Easter European counterparts. We found familiarity bias in gambling sin stocks, which suggests that getting used to something seen as sinful can lead to a lower feeling of rejection. As it is common in behavioural finance, behind the data and numbers of the financial markets, ordinary human behaviour is an essential explanation that defies the orthodox concepts of mathematical efficiency.

The Influence of Representativeness Bias and Hearding Effect on Investment Decisions in the Capital Market

This research aims to explore the influence of representativeness bias and herding effect behavior on rational investment decisions in the capital market. Quantitative methods were used involving 100 investors who were members of the Beginner Stock Investor (ISP) community in Jakarta. The results of the analysis show that representativeness bias and herding effect behavior have a significant influence on rational investment decisions. These findings highlight the importance of awareness of the psychological factors that influence investor behavior in making investment decisions, as well as the need for a more independent and focused approach to fundamental analysis to ensure more appropriate and optimal investment decisions. The practical implication of this research is that a better understanding of investor behavior and its impact on markets can help investors to overcome these biases and improve the quality of their investment decisions.

Does community resilience affect household asset portfolio choices?

AbstractThis paper identifies a positive (negative) relationship between community resilience and household stock market participation (deposit flows). These relationships are less pronounced for higher‐income and married households, indicating an income channel and a marriage channel, respectively. Furthermore, compared to white and Asian households, black households are more sensitive to the effects of community resilience on household investments and deposit flows. Overall, our findings suggest that improvements in people's preparedness for, resilience against, and recovery from potential hazardous events and natural disasters shift households' asset portfolio choices from safe savings to risky stock investments.

Financial management engagement and small and medium-sized businesses in eThekwini municipality, South Africa

Small and medium-sized businesses are widely recognised as the cornerstone of growth in emerging and middle-class countries, and South Africa is no different. They generate many job possibilities and salaries for many individuals who live in cities, making them an essential component of average national production. The main objective of the research was to examine the level to which Small and Medium-sized businesses in the eThekwini Municipality used financial management. The research project used a quantitative method to collect and analyse data from the field. The survey included 60 participants from various small and medium-sized businesses in eThekwini. Proprietors and managers of small and medium-sized businesses were among those who responded. The rate at which organisations implement systems that effectively organise their money was a crucial component in analysing the financial management engagements of small and medium-sized businesses. This can be assessed in various ways, including distributing closed-ended surveys to responders. As a result, the proprietors of small and medium-sized businesses were prompted to score their companies based on the level to which financial preparation strategies were implemented and the funding sources. The research found that small and medium-sized businesses in the research areas did not develop long-term financial strategies that included investments in non-current assets, shares, stocks, and real estate initiatives. Small and medium-sized businesses must establish trustworthy systems for accounting information, disclose and analyse their financial challenges regularly, and advocate for laws that make it simpler for small and medium-sized businesses to obtain inexpensive financing. Since small and medium-sized businesses are recognised as contributing significantly to national economic growth, they must keep growing.

Optimization of Stock Investments in Indonesia Stock Exchange: Comparing the Method of Dollar Cost Averaging (DCA) and Lump Sum (LS)

The aim of this research is to find out how to optimize stock investment using the dollar cost averaging method and the lump sum method and also to compare the performance between the dollar cost averaging method and the lump sum method based on return results. This research uses a descriptive method with a quantitative approach. This research uses 2 companies with the largest market cap listed on the Indonesian Stock Exchange for the 2021-2023 period. The results of this research found that the lump sum method return in 2022 on BBCA shares reached 22.85% and on BBRI shares 18.19% higher than the return on the dollar cost averaging method on BBCA shares which was only 13.70% and on shares BBRI is only 10.86%. The lump sum method return in 2022 is the highest return between 2021 and 2023. These results prove that the lump sum method is more optimal than the dollar cost averaging method.

The Effect Of Earnings Per Share, Debt To Equity Ratio And Net Profit Margin On Stock Returns In Property And Real Estate Sector Companies Listed On The Indonesian Sharia Stock Index (Issi) For The 2018-2023 Period

The company's financial performance is one of the factors that investors pay attention to in investing in the capital market. One of the investment instruments is stocks. The purpose of stock investment is to obtain a share retreat. This study aims to determine the effect of Earning Per Share, Debt to Equity Ratio and Net Profit Margin on stock returns in Properties and Real Estate sector companies listed on the Indonesian Sharia Stock Index (ISSI) for the 2018 ̶ 2023 period. The analysis method used is the panel data regression method with the selected model being the Common Effect Model (CEM). The population in this study is all companies included in the Properties and Real Estate sector listed on the Indonesia Stock Exchange (IDX) for the 2018 ̶ 2023 period as many as 87 companies. The determination of the number of samples was carried out using the Purposive Sampling technique and determined as many as 16 samples of the Company. The results of the t test show that partially Earnings Per Share and Net Profit Margin have a significant effect on stock returns while the Debt to Equity Ratio does not have a significant effect on stock returns. The results of the F test show that simultaneously Earning Per Share, Debt to Equity Ratio and Net Profit Margin have a significant effect on stock returns in Properties and Real Estate sector companies listed on the Indonesian Sharia Stock Index (ISSI) for the 2018 ̶ 2023 period.

Can ESG Integration Enhance the Stability of Disruptive Technology Stock Investments? Evidence from Copula-Based Approaches

This paper provides an investigation into the dependence structure among different disruptive technology sectors driving the Fourth Industrial Revolution and scrutinizes the impact of ESG integration on shaping investments in different tech stock sectors in the presence of ESG consideration, represented by the ESG stock index, versus without specific ESG consideration, represented by the general stock index. The results show that (i) C-vine outperforms R-vine and D-vine when modeling the dependence structure of tech sectors. Intelligent infrastructure is the most crucial sector, with substantial reliance on smart transportation and advanced manufacturing. (ii) ESG integration reduces dependence, especially tail dependence, between tech sectors and the stock market, which benefits the future security sector the most and future communication the least. (iii) ESG integration mitigates risk spillover between tech sectors and the stock market, particularly benefiting final frontiers and intelligent infrastructure. The decrease in downside spillover is more significant compared to upside scenarios. For downside risk, spillover from tech sectors to stock indices is more reduced than the reverse, while the opposite holds for upside risk. These sectoral findings offer insights for market participants in financial market investments, financial regulators in risk management, and listed companies in ESG disclosure.

Kombinasi Metode Webqual 4.0 dan Importance Performance Analysis pada Pengukuran Kualitas Website Stock Exchange

Interest in stock investment in Indonesia is still relatively low compared to other countries, data shows that the population of productive age has reached 189 million, but there are only 4.16 million retail investors in the capital market with an involvement ratio of around 2.2 percent. This shows that the participation ratio of the Indonesian population in investing in shares is less than 5 percent, which is far behind other countries such as the United States (55 percent), Singapore (26 percent) and Malaysia (9 percent). The lagging interest in investing is due to a lack of understanding of digital literacy in investing. This needs to be overcome by increasing the digital literacy understanding of the Indonesian people regarding investing in shares. The webqual 4.0 method is a method used to measure the quality of the stock exchange information system website in Indonesia, namely IDX.co.id, through the use of three measurement variables, namely in terms of usability, information quality, service interaction quality. In addition, the Importance Performance Analysis (IPA) method is applied to carry out performance assessments on expectations of website quality. It can be measured to identify indicators according to user preferences, then the results of these measurements are used to identify indicators that need to be improved on the IDX information system so that can improve user experience, as well as increase digital literacy of stock investment in Indonesia. This research collects information from users through questionnaires which are processed using the linear regression analysis method. The research results show that users are satisfied with the current IDX Website in terms of Usability, Information Quality and Service Interaction Quality, indicated by the T-Statistics value which is higher than the T-Table. So that the public's understanding of digital stock investing literacy facilitated by the idx.co.id website is good. However, based on the Importance Performance Analysis analysis, improvements still need to be made to indicators in quadrants I and III which have low performance. Recommended improvements include improving site navigation, implementing SEO, site redesign, increasing credibility, reorganizing menus, content audits, and increasing user interaction.