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Comment by jfager | Hacker News Reader

"Psychologists have determined, for example, that shares in companies with easy-to-pronounce names do indeed significantly outperform those with hard-to-pronounce names."

A giant "citation needed" needs to be attached to this. A quick search came up with this: http://www.pnas.org/content/103/24/9369.full - pretty terrible. I hope such a breathless claim isn't actually being backed by such lame research.

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One huge "Causation does not imply correlation" needs to be stamped on this one. There is a good chance that companies with complex names have worse marketing overall.

Not to mention, does "outperform" mean "higher earnings over time relative to stock price" or does it mean "stock prices higher relative to earnings"? The latter would seem to be what is predicted, and that's hardly "outperformance".

It should be some measure of market-relative total return, including dividend yield, etc. As far as I can tell from the paper, they don't even adjust for market-relative returns, so if a bunch of unpronounceable companies got launched at the peak of the Internet bubble and proceeded to perform exactly in-line with the market, this would still be counted as underperformance even though it is completely untradeable.

Hey, if everyone starts believing it, it'll happen, right?

Well, actually, the exact opposite is probably true: http://lesswrong.com/lw/yv/markets_are_antiinductive/

(Hello, Eliezer in this post's uncle post!)

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