Should the ticker of Mark Zuckerberg's social networking empire be blamed for bad stock performance for the past three months? Kim Hjelmgaard of Marketwatch thinks so
Research shows that stocks with "nice" names tend to perform better than those with ugly names, writes Hjelmgaard.
“Whereas financial analysts delve into the differential performance of industries and market sectors, a straightforward psychological principle cuts across these categories and predicts, quite simply and robustly, that companies with [easily pronounced] names like Barnings Incorporated will initially outperform [right after an IPO] companies with [difficult] names like Aegeadux Incorporated,” Daniel Oppenheimer, a UCLA professor, writes.
Other examples of funds with tickers that failed to attract investors are PennantPark Floating Rate Capital with the ticker PFLT.
“If I sent you an email in a normal font, at a normal size, you would be able to process that a lot easier than if I sent that same email to you in an italic font, at a smaller size," said professor Adam Alter at New York University. "We make very different judgments depending on the ease at which we can process information.”
Hjelmgaard reports that Facebook did not respond to her question about why it chose the social network as its ticker. The report goes on to say that "the Facebook ticker also leaves some question about how it’s pronounced./ 'Eff Bee.' Of course, Facebook’s market reception might have been quite different had it chosen the ticker 'LIKE'.”
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