Stock Performance Tied To Ease Of Pronouncing Company’s Name
Status: Unusual ResearchThere's nothing hoaxy about this story. It's just another example of how non-rational people can be... especially investors in the stock market. Two Princeton researchers, Adam Alter and Danny Oppenheimer, have discovered that the ease with which a company's name and its ticker symbol can be pronounced has a strong short-term effect on the performance of its stock. In other words, "a stock with the symbol BAL should outperform one with the symbol BDL in the first few days of trading." In Hippo Eats Dwarf I noted a similar effect: that when investors think they've found the next big thing (be it railways, airlines, biotech, dot.coms, or nanotechnology) all stocks whose names seem to have something to do with those fields benefit, whether or not they actually do have something to do with those fields. Thus, in the recent nanotechnology crazy, Nanometrics (ticker symbol: NANO) shot up, even though it makes semiconductor tools and has nothing to do with nanotechnology.
A pattern!Posted by Egret Narcosa in Newport on Fri Jun 02, 2006 at 12:31 PM
Sort of makes sense, in a weird way...Posted by Owen on Fri Jun 02, 2006 at 03:52 PM
Well, I suppose names that are easier to pronounce are also easier to remember, and nobody's going to buy a stock if they can't remember it.Posted by Big Gary in Gun Barrel City, Texas, USA on Fri Jun 02, 2006 at 06:47 PM
Or...revelations.. if they're going to spend hard earned dollars investing, perhaps they could WRITE DOWN the company names and/or symbols. That would eliminate trying to "remember" it. ROTFLMFAO. Rookies.Posted by Dilbert on Mon Jun 05, 2006 at 01:25 AM
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