Buy. Sell. Hold.  Got whiplash from the stock market roller coaster?  Does life seem, well, a little unfair?  If so, you are not alone.

It was during an undergraduate class that Mitch Conover discovered his true academic passion:  finance and the financial markets.  Up until that point, Conover had learned that life was unfair.  Yet here was a University of Chicago-trained professor, stating that financial markets were efficient, meaning stocks are priced fairly because they reflect all public information.

The implication that a small investor could do just as well as a seasoned Wall Street veteran at picking stocks intrigued Conover and prompted him to pursue his Ph.D. in finance.  Much of has research is focused on testing whether financial markets actually are efficient, or well, fair.

“According to this theory, there are no diamonds in the rough when it comes to picking stocks.  There are no undiscovered stocks as everything is already reflected in the current price” said Conover.

But wait.  Before you start throwing darts or picking your own stocks, you might want to massage your tired neck and read on.

In contradiction to the efficient markets hypothesis, Conover’s research has shown that life may not be so fair after all.  Value stocks outperform growth stocks on a risk adjusted basis, both in the U.S. and in international markets. Small cap stocks are also shown to outperform large cap stocks.

In international markets, small cap value stocks generated an average annual return of 27.5% compared to 7.1% for large cap growth stocks. The stronger performance for value stocks appears to be due to a mean reversion process in earnings that investors ignore when pricing stocks.  In the U.S., his more recent research has shown that value stocks in value industries provided an average annual return of 20.4% compared to 6.1% for growth stocks in growth industries.

Another aspect of Conover’s research examines the relationship between Federal Reserve monetary policy and stock returns. He found that over periods when the Fed was expanding the money supply, U.S. stock returns averaged 21.0% versus 2.4% when the Fed was restricting the monetary growth. This relationship was shown to be valuable in a rotational investment strategy.  Interestingly, international stocks are shown to be related to not only local central bank policy, but also to U.S. Fed policy.

With gold prices soaring, his most recent research has garnered a lot of media attention.  Conover finds that an allocation to precious metals improves long-term portfolio performance. An investment in precious metal equities however, is superior to that in the commodities themselves.

Conover’s research has appeared in the Financial Analyst Journal, Journal of Banking and Finance, Journal of Business, Journal of Portfolio Management, Journal of Investing, and numerous other journals. It has been cited in media such as ABC World News This Morning, the Financial Times, the Wall Street Journal, Barron’s, and SmartMoney.com.

Conover has taught undergraduate and MBA classes in Corporate Finance, International Finance, Investments, and Portfolio Management. 

So, you might ask, does Conover pick his own stocks or does he let someone do it for him?

Conover notes that there are many new exchange traded funds which are based on academic investment research. Conover prefers them because they are a low cost method of broadly diversifying.

Based on the work of economics professor Dr. KimMarie McGoldrick and her colleague David Colander, The AEA Commission on Economic Education recently received a grant from the Teagle Foundation to consider the economics major’s integration into the liberal arts.

The end goal of this grant is to develop a report that considers the relationship between the goals and objectives of the economics major and the goals and objectives of a liberal education. It will address questions such as: Is the economics major playing its part in meeting those objectives? Should it be changed? And if it should be changed, how would change be brought about?

In order to provide an opportunity for open discussion and critical review of these issues, two conferences were held in 2007. The first conference, held at Middlebury College, focused on “macro level” changes—considering who is teaching economics, the incentives they face, what training they receive, how this training enhances or inhibits connections between economics and liberal education, and possible reconstructions of the economics major that allow better integration of a liberal education into the teaching of undergraduate economics.

The second conference was held here at the University of Richmond and focused on “micro level” changes, considering how specific activities can serve to enhance existing practices to incorporate more of the liberal education ideals- reconsidering the content and organization of introductory courses, addressing the tensions between the technical and practical aspects of economics, and identifying objectives of the major.

For more details about the Teagle initiative on liberal education, see the report developed by the National Leadership Council at http://www.aacu.org/advocacy/leap/documents/GlobalCentury_final.pdf, and on the Teagle Foundation website, http://www.teaglefoundation.org/intro.htm.

Dr. Robert Dolan, professor of economics at the Robins School, has been installed as the David Meade White Distinguished Teaching Fellow for 2007-2009. The David Meade White Fellowship honors members of the Robins School of Business faculty who have shown exemplary commitment to students’ total education over many years.

Dolan has received the University’s Distinguished Educator Award and the Robins School of Business Outstanding Teacher Award, and he previously held the Jennings Chair in Business.

His research interests include the economics of education and benefit-cost analysis of public programs. He is the recipient of an NSF grant, and his articles have appeared in numerous academic journals, including The Review of Economics and Statistics, The Journal of Human Resources and the Journal of Economic Education.

When Vicente Fox, the former President of Mexico, spoke to the Richmond community last fall, he was joined on stage by the Robins School’s Dr. Jorge Haddock.  Dean Haddock, a native of Puerto Rico, was selected to be the moderator for the question and answer portion of the program held November 3, 2007. 

President Fox is credited with strengthening Mexico’s economy and for implementing democratic reforms throughout Mexico’s government.  At the Forum, he discussed the economic and social challenges facing Latin America, Mexico’s relationship with the United States, the future of free trade and his vision for “the community of North America.” 

Each year, The Richmond Forum presents distinguished journalists, heads of state and speakers who are internationally known and who are the foremost authorities in their field. The Forum is recognized as the premier public forum in the United States.  For more information, visit The Richmond Forum website.

Dr. Stephen Tallman, Professor of Management and The E. Claiborne Robins Distinguished Professorship in Business, has released a new book entitled “A New Generation in International Strategic Management”, published by Edward Elgar Publishing Ltd, UK. This book discusses unique and innovative thoughts about international strategy that are well ahead of the mainstream of international business academics.  Dr. Tallman teaches International Business, Global Strategy, Merger and Alliance Strategies, and Strategic Management at the Robins School. 

Dr. Jeffrey Harrison, Professor of Management and The W. David Robbins Chair in Strategic Management, recently released three new books:  “Foundations in Strategic Management,” (4th Ed.) (with C.H. St. John) published by South-Western Publishing Co. (2008); "Competing for Advantage," (with R.E. Hoskisson, M.A. Hitt & R.D. Ireland) published by South-Western Publishing Co. (2008); and "Managing for Stakeholders: Survival, Reputation and Success," (with R.E. Freeman & A.C. Wicks) published by Yale University Press (2007). Dr. Harrison's research interests include strategic management and business ethics, with particular expertise in the areas of mergers and acquisitions, diversification, strategic alliances and stakeholder management.

Dr. Jonathan Wight, Professor of Economics, recently published “Teaching the Ethical Foundations of Economics,” co-authored with John S. Morton.  The publication was made possible by the support of the John Templeton Foundation. Dr. Wight teaches Principles of Economics, Economic Development in Asia, Africa, & Latin America, and The U.S. in a Global Economy.  He researches moral foundations of capitalism, including extensive research on Adam Smith, and health economics in developing countries.

Dr. Dean Croushore, Associate Professor of Economics and The Rigsby Fellow in Economics, has been featured in several national publications (including The Wall Street Journal, Washington Post, and Conde Nast Portfolio) for his research on consumer behavior and his knowledge of monetary policy.  Dr. Croushore’s research focuses on forecasting, real-time data analysis, and monetary theory and policy.  He is a Visiting Scholar at the Federal Reserve Bank of Philadelphia.

Dr. Jorge Haddock, Dean and Professor of Management, has authored the recently released book “Creating Global Business Leaders: Business Education at the Center of Innovation, Technology, and Globalization,” published by Aspatore Books. Dr. Haddock offers his perspectives on the current and future state of corporate America based on his professional and educational experiences and research. This book describes the challenges that corporate America faces, as well as some of the opportunities that can be explored. Emphasis is given to the need for most businesses to integrate technology and innovation in a global supply chain.