%0 Journal Article
%T Evidence on a New Stock Trading Rule that Produces Higher Returns with Lower Risk
%A Eric Latimer Prentis
%J International Journal of Economics and Finance
%D 2011
%I 
%R 10.5539/ijef.v3n1p92
%X This new stock market trading rule uses three-steps to remove random unsystemic risk from stock price data to smooth volatility. Proving that a predetermined technical analysis relative maxima and minima trading rule for an S&P 500 Index portfolio substantially beats a na ve buy-and-hold policy, at significantly lower risk. Calling key theories in economics and finance into question. The relative maxima and minima trading rule succeeds because of market participants¡¯ emotions. Investor fear and panic selling plunges stock prices downward below equity intrinsic values at market bottoms. Investor greed brings stock prices above equity intrinsic values at market tops. Empirical evidence¡ªconsisting of 81 years of data¡ªconfirms this conclusion.
%U http://www.ccsenet.org/journal/index.php/ijef/article/view/7033