Academic Signal

Academic Signal

We decode finance research into plain English to surface ideas that matter to professional investors.

Archive

US equities may be cheaper than you think + evidence that weaker debt monitoring leads to fewer defaults

US equities may be cheaper than you think + evidence that weaker debt monitoring leads to fewer defaults

In this week’s report: Why US equities are more attractive than the Fed model indicates - equivalent PE of ~15x vs. observed PE >25x and The PIK Debt Paradox: evidence that weaker debt monitoring leads to fewer defaults

Short report “heat score” predicts impact + trading conflicting news stories for 30% return

Short report “heat score” predicts impact + trading conflicting news stories for 30% return

The authors found that activist short reports with more sources have a bigger and more persistent negative impact on the underlying stocks.

Alpha from LLM-measured “distant” stock picks + the correct way to use Sharpe ratios

Alpha from LLM-measured “distant” stock picks + the correct way to use Sharpe ratios

In this week’s report: How “distant investments” reveal true fund skill & how to judge Sharpe ratios without fooling yourself

Separate signal from price: trading factors and fundamental growth

Separate signal from price: trading factors and fundamental growth

From smarter factor timing to redefining growth, fresh research shows investors how to separate lasting structural premiums from fleeting revaluations.

Who’s Still Earning Alpha? Patient Investors and Sentiment Traders

Who’s Still Earning Alpha? Patient Investors and Sentiment Traders

Long-horizon ownership predicts excess returns—especially in stocks short-term managers avoid. Plus: using global news sentiment to forecast equity index moves across 14 markets.

The Private Equity Illusion—and the Overlap Edge

The Private Equity Illusion—and the Overlap Edge

New work shows PE’s outperformance largely boils down to leverage and appraisal smoothing—replicable with public small-cap + leverage. Meanwhile, funds with the lowest holdings overlap beat peers by ~1.2% a year.

Faith and Futures: Two Paths to Market Wealth

Faith and Futures: Two Paths to Market Wealth

One paper shows why low-cost index investing wins over time—the triumph of compounding and belief. Another reveals how VC returns can be replicated (and beaten) with staged leverage on the Nasdaq-100.

ROIIC and Sector-Specific Factors: Smarter Drivers of Value

ROIIC and Sector-Specific Factors: Smarter Drivers of Value

New research highlights ROIIC—not ROIC—as the forward signal for multiple expansion, and shows how sector-specific factors (like in REITs) sharpen attribution and cut false alpha.

The Prediction Trap: Why Investing Needs Causation, Not Just Forecasts

The Prediction Trap: Why Investing Needs Causation, Not Just Forecasts

New research shows that framing stock selection as a classification problem (winner vs. loser) outperforms return forecasting, while López de Prado argues AI fails in investing because it chases correlations instead of causal mechanisms.

From ML Models to Market Structure: 3 Insights You Need

From ML Models to Market Structure: 3 Insights You Need

Columbia, Cornell, and Sussex researchers challenge core assumptions—showing how to train models for trading, why “good” loan terms signal weakness, and how price-weighting beats cap-weighting.

Kelly in the Real World: Why Textbook Formulas Overstate Leverage

Kelly in the Real World: Why Textbook Formulas Overstate Leverage

Columbia research shows that when you apply Kelly to actual return series, optimal leverage shrinks 22–36% versus theory—especially in crisis periods and with less frequent rebalancing.

PE Goes Retail: Individuals in the Game

PE Goes Retail: Individuals in the Game

New research shows wealthy individuals now hold $1–2T in PE assets—and their returns rival institutions. The real driver? Advisor quality, not wealth.

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