Download this Paper Open PDF in Browser

Returns to Investors in Stocks in New Industries

Federal Reserve Bank of Atlanta Working Paper 2008-21

37 Pages Posted: 9 Nov 2008  

Gerald P. Dwyer

Clemson University; Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA)

Cora Barnhart

Palm Beach Atlantic University - Rinker School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: September 1, 2008

Abstract

We examine the returns to investors in publicly traded stock in new industries. We examine data from the United States on sellers of own-brand personal computers, airlines and airplane manufacturers, automobile manufacturers, railroads, and telegraphs. We find that a relatively small number of companies generate outstanding returns and many firms fail. Firms in new industries typically have high volatility of individual stocks' returns. Compared with indexes for the same period, expected returns of firms are higher for two industries, lower for one industry and roughly the same for two industries. Portfolios of firms in new industries generally have lower Sharpe ratios than the overall market.

Keywords: expected returns, options, lottery tickets, returns by industry

JEL Classification: G1, G12, N2, N21, N22

Suggested Citation

Dwyer, Gerald P. and Barnhart, Cora, Returns to Investors in Stocks in New Industries (September 1, 2008). Federal Reserve Bank of Atlanta Working Paper 2008-21. Available at SSRN: https://ssrn.com/abstract=1296128 or http://dx.doi.org/10.2139/ssrn.1296128

Gerald P. Dwyer (Contact Author)

Clemson University ( email )

Department of Economics
Clemson University
Clemson, SC 29634
United States

Australian National University (ANU) - Centre for Applied Macroeconomic Analysis (CAMA) ( email )

ANU College of Business and Economics
Canberra, Australian Capital Territory 0200
Australia

Cora Barnhart

Palm Beach Atlantic University - Rinker School of Business ( email )

901 S. Flagler Drive
West Palm Beach, FL 33401
United States

Paper statistics

Downloads
96
Rank
229,011
Abstract Views
896