It has been suggested that information has the three following uses:1. Information can be employed to earn trading profits.2. Information can improve the operating decisions of a firm or group of firms and thereby increase the stock price.3. Information can reduce the risk of a firm or group of firms and thereby increase the stock price.

This paper analyzes the recommendations of common stocks made by the investment newsletters followed by the Hulbert Financial Digest. We conclude that, taken as a whole, the securities that newsletters recommend do not outperform appropriate benchmarks. Our data provide modest evidence that the future performance of a newsletter is related to its past performance, when performance is measure by raw returns. Evidence of persistence vanishes, however, when performance is measured by abnormal returns. We find little, if any, evidence of herding, i.e., cross-sectional dependence of recommendations, across newsletters. Newsletters tend to recommend securities that have performed well in the recent past. Finally, newsletters with poor past performance are more likely to go out of business.

The basic theoretical relationships between the value of the firm and leverage were set forth by Modigliani and Miller (MM). Much work has tested the MM relationships empirically, including studies which used data from regulated industries. Gordon has stated that, because earnings before interest and taxes are not held constant in regulated industries, the MM formula used in empirical work is invalid. However, Elton-Gruber (EG) challenge Gordon’s statement. The present paper shows that both the Gordon and the EG formulae hold only under special conditions. Under "normal" conditions of demand, both formulae underestimate the value of the levered firm. We show that there is no a priori method of estimating the effect of leverage on the value of a regulated firm without knowledge of specific supply and demand conditions. As researchers do not usually know these conditions, the results of papers testing the MM propositions with data on regulated industries are ambiguous. General formulae for the discount rate and the valuation of a levered firm in a regulated industry are presented.

Jeffrey F. Jaffe, Gershon Mandelker, The "Fisher Effect" for Risky Assets: An Empirical Investigation, The Journal of Finance, Vol. 31, No. 2, Papers and Proceedings of the Thirty-Fourth Annual Meeting of the American Finance Association Dallas, Texas December 28-30, 1975 (May, 1976), pp. 447-458

Hot markets, which refer to instances when stocks increase their offering prices to a level greater than average market premiums, have been overlooked in recent academic literature. Thus, this research examines factors which may aid in the prediction of hot issue markets. A sample of unseasoned stock issues offered between January 1, 1960 and October 31, 1970 is compiled, noting the stock's original offering price and their first two months' ending bids. In order to understand overall market performance during this time, data was also collected from the daily Standard & Poor 500 (SP the correlation between new issue premiums and aftermarket performance; the association between the number of monthly new offerings and simultaneous new issue premiums; and finally the correlation between new issue premiums and past market performance. Several implications for investors, issuers, and researchers are presented, as are directions for future research. The findings indicate that a level of predictability exists within the first month's residuals, which has implications for the timing of offerings and new issue purchases. A higher offering price, when compared to a cold issue market's efficient prices, may be obtained by issuers during that first month's issuance. (AKP)