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Can investors gain from investing in certain sectors?
journal contributionposted on 2017-05-01, 00:00 authored by Paresh Narayan, Huson Ali Ahmed, S Narayan
In this paper, we analyse investor behaviour on the NYSE. We show that average returns from dynamic trading strategies, regardless of the different portfolio constraints, out-perform passive trading strategies in all sectors. In addition, the performance of dynamic strategies is much more impressive in some sectors than in others. We also undertake a profitability and safety analysis based on a portfolio of high-performing sectors and show that at higher levels of expected returns, a rise in profitability comes at the expense of less safety. Our results, on the whole, reveal that investors' can gain substantially by investing in certain sectors.