Easily Pronounced Stocks

An academic study finds that easily pronounced stocks do better (via the Kirk Report.)

One explanation might be that bigger companies simply have more marketing people to dream up a catchy title, or certain business sectors may naturally tend towards simpler, more pronounceable names. But after a thorough statistical analysis, the psychologists concluded that there was no link between a company’s type or size and its stock performance.
To prove the point, the pair finally analysed how well companies performed on the basis of their three-letter stock ticker code, which a company doesn’t determine itself. Amazingly, pronounceable codes such as KAR still tended to do much better than unpronounceable ones such as RDO. Once again, the pair invested their fictitious $1,000, and found that the fluent codes were $85 up on the first day, although the portfolio was just $20 ahead after a year.

Posted by on June 5th, 2006 at 3:04 pm


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