I found this table one of the most interesting for the month. Corporate behavior is all about change, innovation, and adapting to market demands. This is a constant, yet many of the models we build to describe equities are based on assumptions of stability. The first products offered by many firms are long gone, and most investors do not remember or have never encountered these products. Lego - wooden toys? McDonalds - hot dogs? Who would have guessed?
We believe that betas are stable; however, if you examine this list, firm betas will be pretty dynamic. Now it may be stable over a short-term three-year period, but if a firm is transitioning strategy, these short-term betas will also be under attack and changing radically. Modelers cannot escape the news about firms.
from @stats_feed
No comments:
Post a Comment