Should Wiley E. Coyote ever get into buying stocks, I have no doubt he would stack his portfolio with shares of ACME. I’m just not so sure any savvy penny stock investor should follow the economic advice of a coyote.
Investors of the two-legged kind, whether they’re looking at a penny stock or a blue chip behemoth, tend to take a myriad of details into consideration before investing. And so they should.
But a recent study suggests that investors of every stripe take mental short-cuts when it comes to investing…at a time when they should be more rational.
Wall Street gurus and penny stock investors alike it seems, are more likely to purchase newly offered stocks that have an easily pronounceable name, say a pair of Princeton University researchers.
Adam Atler and Danny Oppenheimer found that a stock’s performance immediately after an initial public offering (IPO) appears to be linked to how easily investors (penny stock or otherwise) can pronounce its name and stock ticker symbol.
Danny Oppenheimer, commented, “These findings contribute to the notion that psychology has a great deal to contribute to economic...