This hypothesis may appear to be inconsistent with previous findings on contrarian investment theory, suggesting that value stocks fall less after negative earnings surprises relative to glamour stock
, while value stocks rise more after positive earnings surprises relative to glamour stocks
Contrary to general explanation they find the announcement reaction to glamour stock
is 3.96 percent (t= 13.18) which is much larger than the announcement return for value stocks of 0.91 percent (t=1.57).
ABSTRACT: We investigate whether the accruals anomaly is a manifestation of the glamour stock
phenomenon documented in the finance literature.
Midlands-based Keller, the specialist cement and foundations group, is not a glamour stock
and is often overlooked.
For example, it suggests that a high-priced glamour stock
has particularly low conditional expected returns, and particularly high conditional volatility, in the wake of recent bad news about fundamentals, because this high-price/bad-news configuration suggests that the potential for a "paradigm shift" among investors is elevated.
While these are today's glamour stocks
, Feingold is candid about the potential pitfalls of these kinds of secular growth stocks:
A series of papers by Fama and French (1992, 1993, 1995, 1996, 1998) starting with an examination of cross-section of returns and cuhninating with an examination of returns on value versus glamour stocks
has led to a resurgence of this literature.
The high-earning glamour stocks
have always been in new technology enterprises, starting with canals, then railways through more recently to information technology and now the Internet.
Stocks with low ratios of their market values to their book values (value stocks) generally outperform stocks with high market-book ratios (growth, or glamour stocks
Recently, John Rekenthaler of Morningstar, the Chicago-based fund-tracking service, wrote in his column on the concern's Website that "in comparison with the overall stock market, the S&P 500 has become light on the pricey glamour stocks
and heavy in the cheap, old-era industries like cyclicals, banks, tobacco.
The Footsie fallers board read like a roll-call of last year's glamour stocks
, with top-ten dogs of the day including IT group CMG down 471p to pounds 38.50, microchip designer ARM Holdings off 340p to pounds 36.69, Energis down 243p at pounds 26.92, Sage Group 50p worse at 649p, Marconi 70p lighter at 956p, Misys down 55p at 815p and Colt Telecom 182p down at pounds 28.00.
Compounding the situation, Wall Street has the industry on hold, with analysts seeing few glamour stocks
among the companies that feed the nation.