Price Pressure: Evidence from the 'Dartboard' Column
Posted: 7 Nov 1998
We investigate whether analysts' recommendations in the "Dartboard" column of the Wall Street Journal have an impact on stock prices and whether this impact is temporary or long-lived. We document a significant 2-day announcement effect that is reversed within 15 days. This announcement effect is intertwined with the pros' track record. Our study supports the price pressure hypothesis: abnormal returns and trading volumes around the announcement day are mainly driven by noise trading from naive investors. On average, investors following the experts' recommendations lost 3.8% on a risk-adjusted basis over a 6-month holding period.
JEL Classification: G12, G14
Suggested Citation: Suggested Citation