

Hedge funds with media coverage underperform no-coverage funds by 3.5%/yr - dsplittgerber
http://www.bloomberg.com/apps/news?pid=20601039&sid=a0cTvxpUgRKM

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morisy
Thanks for including the original link, dsplittgerber, because the actual
article is rather misleading, attributing the underperformance to "vanity" via
some ancient Rome anecdote without real evidence. He ignores the paper's own
author's hypothesis:

"This hypothesis posits that in informationally incomplete markets, investors
are not aware of all securities. As a consequence, stocks with lower investor
recognition need to offer higher returns to compensate their holders for being
imperfectly diversi fied. By disseminating information to a wide audience,
media coverage broadens investor recognition. Thus, in equilibrium, stocks
with intense media coverage earn a lower return than neglected stocks."

So, market forces, not hubris.

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dsplittgerber
Paper <http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1563703>

