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RETURNS TO INVESTORS IN STOCKS IN NEW INDUSTRIES
Author(s) -
BARNHART CORA,
DWYER GERALD P.
Publication year - 2012
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2011.00395.x
Subject(s) - stock (firearms) , sharpe ratio , economics , business , financial economics , monetary economics , portfolio , mechanical engineering , engineering
We examine investors' returns from publicly traded stock in new industries associated with major changes in transportation and communication in the United States. Return distributions during the development of own‐brand personal computers, airlines, airplane and automobile manufacturers, railroads, and telegraphs reveal three general characteristics. A few companies generate outstanding returns, many firms fail, and returns are volatile. Firms' expected returns are higher than market returns for three of the five industries. Sharpe ratios and Jensen's alphas for portfolios of each new industry indicate that portfolios of stocks in firms in new industries are not an obvious bad deal. ( JEL G1, G12, N2, N21, N22)