FUTURE RETURNS

Quick hits on CEO presentations, log-ins and advisor loyalty.

WE LIKE TO...

Walk the talk, but talking the talk can apparently boost a company’ s returns. A study of stock-market responses to more than 900 strategy presentations given by new CE Os of companies on the NYSE or Nasdaq between 2000 and 2010 found that prices rose by an average of 5.3% on presentation day for those who outlined their strategy within 100 days. The longer a new CEO waits, the smaller the average positive effect, with companies gaining 1.9% if CE Os waited until being in charge 101 to 200 days .“New CEO appointments are typically associated with strategic change, which means they set off a lot of investor uncertainty; the greater the uncertainty, the more sensitive the stock price will be to the presentations and to the timing of them ,” said Richard W hitting ton, professor of Strategic Management at University of Oxford’s Saïd Business School, and co-author of the study.

WE HATE TO...

Look at our portfolio’ s plummeting performance and that’ s not uncommon. A study of more than 852 million day-to-day login observations of 1.1 million investors over a two-year period found that account log ins fell by 9.5% after the stock market dropped the previous day .“Not logging in when the news is likely to be bad is one strategy that investors use to minimize the pain while taking beneficial risks ,” said Carnegie Mellon University economist George Lo ewen stein and co-author of the study. Investors also paid less attention when the VI X indicated that market volatility was expected to be high. Not surprisingly, attention increased when the news was good.

WE WANT TO...

Be loyal to our service providers, but have a hard time recommending them. A Spectrem Group study of more than 3,000 affluent investors( net household worth between $100,000 and $25 million) found they rated themselves quite high on a loyalty scale (83.26/100), but only 9% recommended their financial institution to others and 30% never did. Investors placed the highest value on an advisor’ s service quality and a lack of pro activity is the No .1 reason they would switch providers.—