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Chevron Corporation Common Stock (NYSE:CVX)

Real-time price：$153.24

Chevron is one of the largest publicly traded oil and gas companies in the world with operations that span almost every corner of the globe. The only energy component of the Dow Jones Industrial Average, Chevron is fully integrated, meaning it participates in every aspect related to energy from oil production, to refining and marketing. Chevron remains well positioned to navigate the volatility in oil and gas prices.Being an integrated firm engaged in all aspects of the oil and gas business. Chevron divides its operations into two main segments: Upstream and Downstream. Chevron's other activities include transportation and chemicals. Chevron's current oil and gas development project pipeline is among the best in the industry....

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Here we provide our AYA proprietary alpha stock signals for all premium members on our AYA fintech network platform. Specifically, a high Fama-French multi-factor dynamic conditional alpha suggests that the stock is likely to consistently outperform the broader stock market benchmarks such as S&P 500, Dow Jones, Nasdaq, Russell 3000, MSCI USA, and MSCI World etc. Since March 2023, our proprietary alpha stock signals retain U.S. Patent and Trademark Office (USPTO) fintech patent protection, approval, and accreditation for 20 years. Our homepage and blog articles provide more details on this proprietary alpha stock market investment model with robust long-term historical backtest evidence.

Sharpe-Lintner-Black CAPM alpha (Premium Members Only) Fama-French (1993) 3-factor alpha (Premium Members Only) Fama-French-Carhart 4-factor alpha (Premium Members Only) Fama-French (2015) 5-factor alpha (Premium Members Only) Fama-French-Carhart 6-factor alpha (Premium Members Only) Dynamic conditional 6-factor alpha (Premium Members Only) Last update: Saturday 5 July 2025

Chanel Holden

2025-07-02 04:06:11

Bullish

Quantitative fundamental analysis

Our new podcast deep-dives into why EQ trumps IQ in our social interpersonal relationships. Former New York Times popular science author and Harvard social psychologist Daniel Goleman explains why emotional intelligence often serves as a more important critical success factor than high IQ for our personal growth, success, virtue, and happiness in life, business, innovation, and entrepreneurship.

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$PLTR $KKR $RACE $BABA $BIDU $TME $BILI $IQ $JD $PDD $NIO $XPEV $BFLY $CVX $XOM $OXY $C 

$T $TMUS $VZ $SNOW $CRWD $NET $SNPS $KO $BRK.A $BRK.B $CMCSA $TSM $QBTS $QUBT $RGTI 



The original blog article is available on our AYA fintech network platform.

This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/43O7TzP

Former New York Times popular science author and Harvard clinical psychologist Daniel Goleman describes, discusses, and delves into why emotional intelligence serves as a more important critical success factor than high IQ for our virtue, peace, happiness, and even fulfillment in life, business, innovation, and entrepreneurship. Goleman introduces many millions of readers worldwide to the rare unique concept of emotional intelligence. Emotional intelligence refers to the combination of 5 key positive personality traits as well as psychological skills, talents, core competences, and dynamic capabilities: self-awareness, mood control, motivation, empathy, and better interpersonal relationship management. Goleman suggests that these skills combine to account for more than 80% of success in life. Further, high IQ is not a guarantee of success, virtue, peace, joy, and fulfillment in life, business, innovation, and entrepreneurship. Although many people learn these 5 key psychological skills in childhood, many adults can still learn to apply these practical skills, talents, core competences, and dynamic capabilities to build better personal growth advances, social habits, team mindsets, inclusive worldviews, and interpersonal relationships. In essence, our new emotionally intelligent insights, actions, and behaviors remake, reshape, and reinforce several other keystone habits, growth mindsets, hard truths, worldviews, and positive patterns in iterative continuous improvements through life, business, innovation, and entrepreneurship.

IQ contributes to less than 20% of all life success, and the other 80% of life success arises from better, bolder, brighter, and broader social relations and achievements in emotional intelligence, or EQ, in life, business, innovation, and entrepreneurship. With emotional intelligence, the 5 key positive personality traits, skills, talents, core competences, and dynamic capabilities are self-awareness, mood control, internal motivation, empathy, and social relationship management. People use, apply, and leverage 2 different complementary minds. The first mind thinks in terms of rational thoughts, insights, and many other ideas, and the second mind feels with dramatic human emotions. These 2 different complementary parts and regions of the human brain often operate independently. Strong, intense, fervent, powerful, and dramatic human emotions interfere with clear rational thoughts, prescient insights, and other ideas. Specifically, fears, dreads, worries, and anxieties undermine the intellectual mind. In our modern life journey, it is vital for us to find a delicate intelligent balance between reason and passion. Many people experience the natural flow of thoughts, insights, and other new ideas, when these people fully engage themselves in some specific tasks, missions, and activities. Such specific tasks, missions, and activities often better fit their emotional intelligence profiles, skills, talents, core competences, intellectual interests, dynamic capabilities, and personal preferences in due course. For this reason, it is imperative for most people to apply their emotional intelligence as a cost-effective tool for time management. In the modern management science, prescient feedback is the common corporate currency of emotional intelligence. In life, business, innovation, and entrepreneurship, the ultimate success of a team of experts is proportional to their complete emotional intelligence. The high IQ of each individual contributor explains no, little, and minimal variation in team performance. Good team chemistry requires emotionally intelligent questions, answers, insights, actions, solutions, and interactions. These team interactions often relate to the key personal mastery of the 5 major components of emotional intelligence. In summary, our emotionally intelligent questions, answers, insights, ideas, actions, behaviors, and interactions remake, reshape, and reinforce many other growth mindsets, hard truths, keystone habits, worldviews, and iterative continuous improvements in life, business, innovation, and entrepreneurship.

In our increasingly inclusive global human society, we cannot agree with the fiction: all our human actions, efforts, and decisions are completely due to pure rationality, devoid of human emotions, because we often feel many different thoughts, insights, concerns, and emotions in our day-to-day lives, jobs, studies, research endeavors, and even spiritual pursuits. We feel a wide variety of human emotions about almost all aspects of life, business, innovation, and even entrepreneurship. We think; we learn; we forget; we remember; we imagine; and we feel all kinds of emotions about everything. From week to week, we weave together thoughts, insights, worldviews, actions, and behaviors with human emotions. The common human emotions span fear, disgust, surprise, anger, sadness, contempt, peace, joy, trust, and happiness. Goleman draws a distinction between IQ and EQ: these personality traits, talents, and skills are not opposite core competences, but alternatively, separate dynamic capabilities. This split approximates the common folk distinction between head and heart. When a person knows something is right and correct with no flaws in his or her heart, this knowledge is a different order of conviction with a deeper degree of certainty. Indeed, this knowledge differs from the same thought in the rational mind. This strong sense of rightness lurks deep in the body and hence serves as part of a steady background flow of human emotions throughout the day. In practice, the rational mind is often slower than emotional mind. The former takes a few moments to process all vital relevant information, whereas, the latter springs into actions with no pause. With these 2 complementary minds, we learn to keep a delicate balance between reason and passion.

From day to day, we send emotional cues, colors, and signals in every encounter. These emotional cues, colors, and signals affect our family and friends, coworkers, leaders, teammates, and even strangers. When we apply emotional intelligence at its best, we are able to enter the new normal steady state of a natural flow of ideas, thoughts, insights, lessons, worldviews, actions, decisions, and behaviors. The key flow empowers us to immerse ourselves in creative, optimal, and impactful actions, pursuits, and experiences. During this key flow, we enjoy with intense mental focus what we try to accomplish in due time. Good examples of flow experiences include reading a novel, writing a book, composing music, coding a new software solution, playing a sport, and painting a portrait. A sense of accomplishment, or warm glow, often serves as the intrinsic reward for each of these flow experiences.

In terms of biological design for the basic neural circuitry of human emotions, our innate personality traits, skills, talents, key competences, and dynamic capabilities represent what worked best for the last 5,000 human generations. In this long-term view, we grow, learn, succeed, fail, refocus, evolve, and adapt in response to many external life circumstances, vicissitudes, episodes, and scenarios. We can all learn to master the 5 common components of emotional intelligence for personal growth advances, growth mindsets, hard truths, keystone habits, worldviews, and iterative continuous improvements in life, business, innovation, and entrepreneurship. In a positive light, we bounce back better to bring brighter intelligence to our emotions, civility to our streets, motivation to our ventures, and empathy to our communities. When we learn to be more mindful, careful, and aware of our personal flaws, faults, failures, mistakes, setbacks, obstacles, difficulties, and disappointments, we apply a good, unique, and positive sense of humor for better self-care to achieve iterative continuous improvements in our social habits and personal growth mindsets. After all, tomorrow is another day. Through our life journey, we should learn to carry out emotionally intelligent insights, actions, responses, and solutions to help enrich the modern lives of others.

Below we provide hyperlinks to many other recent podcasts, surveys, research articles, and blog posts on global macro-finance, asset return prediction, trade, technology, fiscal-monetary policy coordination, and fundamental industry analysis for stock market investors worldwide. Key technological advancements include generative artificial intelligence (Gen AI) large language models (LLM), electric vehicles (EV), autonomous robotaxis (AR), virtual reality (VR) headsets, semiconductor microchips, high-speed broadband networks, telecoms, cloud services, social media platforms, quantum computers, and pharmaceutical treatments, medications, and therapies.

Former New York Times science author and Harvard social psychologist Daniel Goleman explains why greater mental focus serves as a vital mainstream driver of personal growth, success, virtue, happiness, and fulfillment in life, business, innovation, and entrepreneurship.

Former New York Times science author and Harvard social psychologist Daniel Goleman explains why emotional intelligence often serves as a more important critical success factor than high IQ for our success, virtue, and happiness in life, business, innovation, and entrepreneurship.

Former New York Times prolific team author, and Pulitzer Prize winner Charles Duhigg delves into how we can change our lives for the better by mastering our habits from day to day.

Serial venture capitalist Ben Horowitz describes many hard truths, lessons, and insights from his rare unique entrepreneurial journey of running LoudCloud from a Silicon Valley tech startup to a $1.65 billion sale to Hewlett-Packard.

Stanford psychology professor Carol Dweck describes, discusses, and delves into the reasons why the growth mindset helps motivate individuals, teams, and senior managers to accomplish more with greater grit, focus, and resilience.

President Trump poses new threats to Fed Chair monetary policy independence again.

What are the mainstream legal origins of President Trump’s tariff policies?

American exceptionalism often turns out to be the heuristic rule of thumb for better economic growth, low and stable inflation, full employment, and macro-financial stability.

In the broader modern monetary policy context, central banks learn to weigh the trade-offs between output and inflation expectations and macro-financial stress conditions.

Today, tech titans, billionaires, serial entrepreneurs, and venture capitalists continue to reshape and even disrupt global pharmaceutical investments for both better healthspan and longer lifespan.

Artificial intelligence continues to reshape the current global market for better biotech advances, medical innovations, and healthcare services.

The global market for GLP-1 anti-obesity weight-loss treatments now grows substantially to benefit more than 1 billion people worldwide by 2030.

Is higher stock market concentration good or bad for Corporate America?

Geopolitical alignment often reshapes and reinforces asset market fragmentation in the broader context of financial deglobalization.

The global cloud infrastructure helps accelerate the next high-tech revolutions in electric vehicles (EV), virtual reality (VR) headsets, artificial intelligence (AI) online services, and the metaverse.

The new homeland industrial policy stance tilts toward greater global resilience across the major high-tech supply chains worldwide.

China poses new threats to the U.S. and its western allies.

How can generative AI tools and LLMs help enhance human productivity?

What are the macrofinancial ripple effects of central bank digital currency (CBDC) design, issuance, and broad user adoption?

Both BYD and Tesla have become serious global manufacturers of electric vehicles (EV) worldwide.

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

Daniel Goleman explains why emotional intelligence is more important than high IQ for our success, virtue, and happiness in life. - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

This new self-improvement book review delves into the non-fiction best-seller, Emotional Intelligenc...

https://ayafintech.network/blog/self-improvement-book-review-emotional-intelligence-by-daniel-goleman/
Comment

Monica McNeil

2025-06-13 07:31:20

Bullish

Quantitative fundamental analysis

Our new podcast deep-dives into President Trump’s recent criticisms of Fed Chair monetary policy independence again. We believe President Trump would not directly challenge central bank independence by seeking some alternative Supreme Court judgment by contrast to the landmark 1935 Humphrey’s Executor precedent. In the best likelihood of success, President Trump might appoint a political ally to be the new Fed Chair as a replacement for the current Fed Chair Jerome Powell in May 2026.

$IONQ $ZIM $DOCU $COST $HD $PG $WMT $TGT $CVX $PARA $NFLX $DIS $T $TMUS $VZ $V $MA 

$AXP $PNC $MS $GS $HPE $CSCO $ORCL $IBM $SNPS $NET $CRWD $ARM $AMD $AVGO $QCOM 

$PFE $MRK $JNJ $BMY $LLY $NVO $GSK $MRNA $AZN $BNT $AEO $AMC $RACE $F $GM $TM $OXY 



The original blog article is available on our AYA fintech network platform. https://ayafintech.network/blog/president-trump-poses-new-threats-to-fed-chair-monetary-policy-independence-again/

This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/4ebeoQH

We describe, discuss, and delve into the mainstream reasons, concerns, and considerations for President Trump to pose recent threats to the Federal Reserve System’s monetary policy independence again. The Trump administration seems to set in motion a new challenge to the landmark 1935 Humphrey’s Executor judgment from the Supreme Court. This landmark Supreme Court judgment has prevented all American presidents from removing government officers of independent agencies without any cause. In 1933, President Roosevelt fired Bill Humphrey from the Federal Trade Commission (FTC) without any cause, although the FTC Act permitted such dismissal only for inefficiency, neglect of duty, or malfeasance in office. In 1935, the Supreme Court ruled this presidential dismissal invalid, and hence distinguished FTC commissioners as quasi-legislative or quasi-judicial officers, not executive officers, that might be subject to presidential removal only with sound, fair, and just legitimate procedures in accordance with the key statutes set by Congress. In addition, the Supreme Court upheld the Independent Counsel Act of 1978 to affirm that Congress could create key independent agencies with restrictive removal protections for these officers. In America, the independent agencies include the American Federal Reserve System (FRS), Federal Trade Commission (FTC), Environmental Protection Agency (EPA), Fannie Mae, Freddie Mac, National Labor Relations Board (NLRB), as well as Public Company Accounting Oversight Board (PCAOB), among others.

The Federal Reserve System retains instrument independence, but not goal independence, in the wider context of the statutory dual mandate for monetary policy. In effect, the Federal Reserve System has the freedom to apply its monetary policy tools and instruments without political interference in accordance with the narrow dual mandate of both price stability and maximum employment in America. This dual mandate combines with only several monetary policy tools, instruments, and market operations to suggest that the Federal Reserve System keeps narrow independence under sound, robust, and efficient statutory conditions.

For the Federal Reserve System as an independent government agency, this independence remains vital to produce better economic outcomes, specifically low and stable inflation and broader economic growth. In a counterfactual scenario where the American politicians could instruct the Fed Chair to steer monetary policy decisions with further interest rate cuts, such political interference would risk plunging the American economy back into severe stagflation in the 1970s. When we take into account the empirical studies from central banks worldwide, we infer that a presidentially driven shift toward a less independent Federal Reserve System would likely lead to higher inflation, higher long-end Treasury bond interest rates, lower stock market prices and returns, and a substantially weaker American dollar. These 2 latter ripple effects on asset prices and exchange rates would turn out to be more severe in the broader global context when the central bank officers were subject to presidential removal, dismissal, or relegation without any cause, such as inefficiency, neglect of duty, or malfeasance.

In American financial history, the president has never been able to remove Fed Chair without cause. If the Supreme Court overturned the landmark 1935 Humphrey’s Executor for-cause removal protection, this surprise judgment would inexorably usher in a new open season on appointees across all of the relevant independent government agencies in America. Even if the Supreme court overturned this for-cause removal protection, the Fed Chair and several other senior officers could still receive exemptions in light of the Federal Reserve System’s rare unique position among the American independent government agencies.

In the best likelihood of success, President Trump may not be able to fire Fed Chair Jerome Powell and other monetary policy decision-makers within the Federal Reserve System; but, President Trump could simply appoint a new political ally as Fed Chair upon the end of Chair Powell’s second term in May 2026. Given the rigorous Senate confirmation process for Fed Chair and other senior officers within the Federal Reserve System, as well as the committee structure of the Federal Open Market Committee (FOMC), the Fed Chair often tends to be extremely influential over monetary policy decisions, interest rate adjustments, and several other macro-financial affairs. In addition to the Fed Chair, the FOMC comprises 12 monetary policy advisors, officers, and decision-makers with the 7 members of the Board of Governors, the president of the Federal Reserve Bank of New York, and 4 of the other 11 Reserve Bank presidents who serve and rotate as extra committee members with annual terms on a regular basis. The FOMC makes all of the monetary policy decisions and interest rate adjustments by majority vote. Unlike the Supreme Court, the Fed Chair almost never votes in the minority. The broader FOMC would probably not hesitate to express dissent if a new Fed Chair tried to pursue monetary policy decisions, especially interest rate adjustments, not in accordance with the Federal Reserve System’s dual mandate.

In light of the extant American domestic institutional arrangements for the FOMC specifically, and the Federal Reserve System more generally, President Trump’s recent remarks, public talks, and demands for interest rate cuts are not rare, unusual, or atypical in American history. We identify numerous recent presidential attempts to publicly talk down interest rates in the past few decades. However, these presidential demands for interest rate cuts have had only minimal impact on monetary policy outcomes. For the foreseeable future, we can expect this empirical result to persist in the FOMC, Federal Reserve System, and even almost all of the independent government agencies in America. Even if there might be some serious risks to Fed Chair independence today, we believe Trump talk is not one of these risks.

In recent years, the Federal Reserve System seems to have become a bit too independent in some ways by wading into several fresh policy areas outside the statutory dual mandate. Good examples span the Federal Reserve System’s recent attempts to dip its toes into the purchases of large amounts of mortgage securities for more affordable residential properties, climate change risk management, and even economic inequality. At least some of these key policy goals fall outside the broader statutory remit for monetary policy, specifically the dual mandate of both price stability and maximum sustainable employment. For this reason, the recent mainstream monetary policy framework reviews for central banks worldwide warrant some strategic reset for the FOMC, Fed Chair, and Federal Reserve System to better realign U.S. monetary policy decisions, interest rate adjustments, and several other macro-financial policy affairs with the statutory dual mandate. At any pace, it is vital for the Federal Reserve System not to attempt to spin the jury by crossing the line into new democratic advocacy on political issues such as better climate change risk management for rare disasters, affordable residential real estate, and even economic inequality.

We further describe, discuss, and delve into the broader macro-financial asset implications of lesser Federal Reserve System independence. A less independent Fed Chair, FOMC, or Federal Reserve System could cause more frequent foreign exchange currency intervention, less liquidity and capital support for big banks and other financial institutions in rare times of severe macro-financial stress (such as the key Global Financial Crisis of 2008-2009 and the recent rampant Covid pandemic crisis of 2020-2022), and a gradual decline in the greenback as the rare, unique, and dominant global reserve currency. Also, a less independent Federal Reserve System could reduce the modern appeal of both U.S. Treasury bonds and several other dollar assets for foreign investors. The vast majority of these foreign investors include central banks, sovereign wealth funds, foreign reserve managers, and numerous active and passive index funds. In the best-case scenario, Treasury bond yields would need to increase substantially to motivate these foreign investors to continue buying these safe dollar assets. In recent times, the 3 major credit rating agencies downgrade Treasury bonds from the top-notch investment grade. As a consequence, we witness significant fluctuations in American Treasury bond prices, returns, yields, and many other asset risk premiums. Less Fed Chair independence could exacerbate these volatile fluctuations in the global markets for Treasury bonds and other dollar assets. By contrast, gold would shine brighter as a better alternative stable store of value to Treasury bonds and other dollar assets if President Trump seeks to further weaken Fed Chair independence in due course.

Below we provide hyperlinks to many other recent podcasts, surveys, research articles, and blog posts on global macro-finance, asset return prediction, trade, technology, fiscal-monetary policy coordination, and fundamental industry analysis for stock market investors worldwide. Key technological advancements include generative artificial intelligence (Gen AI) large language models (LLM), electric vehicles (EV), autonomous robotaxis (AR), virtual reality (VR) headsets, semiconductor microchips, high-speed broadband networks, telecoms, cloud services, social media platforms, quantum computers, and pharmaceutical treatments, medications, and therapies.

President Trump poses new threats to Fed Chair monetary policy independence again.

What are the mainstream legal origins of President Trump’s tariff policies?

American exceptionalism often turns out to be the heuristic rule of thumb for better economic growth, low and stable inflation, full employment, and macro-financial stability.

In the broader modern monetary policy context, central banks learn to weigh the trade-offs between output and inflation expectations and macro-financial stress conditions.

Today, tech titans, billionaires, serial entrepreneurs, and venture capitalists continue to reshape and even disrupt global pharmaceutical investments for both better healthspan and longer lifespan.

Artificial intelligence continues to reshape the current global market for better biotech advances, medical innovations, and healthcare services.

The global market for GLP-1 anti-obesity weight-loss treatments now grows substantially to benefit more than 1 billion people worldwide by 2030.

Is higher stock market concentration good or bad for Corporate America?

Geopolitical alignment often reshapes and reinforces asset market fragmentation in the broader context of financial deglobalization.

The global cloud infrastructure helps accelerate the next high-tech revolutions in electric vehicles (EV), virtual reality (VR) headsets, artificial intelligence (AI) online services, and the metaverse.

The new homeland industrial policy stance tilts toward greater global resilience across the major high-tech supply chains worldwide.

China poses new threats to the U.S. and its western allies.

How can generative AI tools and LLMs help enhance human productivity?

What are the macrofinancial ripple effects of central bank digital currency (CBDC) design, issuance, and broad user adoption?

Both BYD and Tesla have become serious global manufacturers of electric vehicles (EV) worldwide.

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

President Trump poses new threats to Fed Chair monetary policy independence again. - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

This report delves into President Donald Trump's recent criticisms of Fed Chair Jerome Powell with s...

https://ayafintech.network/blog/president-trump-poses-new-threats-to-fed-chair-monetary-policy-independence-again/
Comment

Becky Berkman

2025-05-30 08:56:52

Bullish

Quantitative fundamental analysis

Our new podcast deep-dives into whether increasingly higher stock market concentration is good or bad for Corporate America, institutional investors, and retail stock market investors worldwide. We pay particular attention the key economic policy implications of American exceptionalism.

$META $AAPL $MSFT $GOOG $GOOGL $AMZN $NVDA $TSLA $AMD $ARM $ORCL $CSCO $IBM $TSM 

$BABA $BIDU $TME $NIO $RIVN $XPEV $JD $PDD $KKR $IQ $BILI $NFLX $DIS $WRB $PARA $IONQ 

$WMT $TGT $COST $CVX $HD $PD $HPE $SNOW $CRWD $NET $AEO $AMC $BRK.A $BRK.B $AXP 



The original blog article is available on our AYA fintech network platform. https://ayafintech.network/blog/is-higher-stock-market-concentration-good-or-bad-for-corporate-america/

This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/3F1fpgN

In recent years, S&P 500 stock market returns exhibit spectacular concentration in the top tech titans Meta ($META), Apple ($AAPL), Microsoft ($MSFT), Google ($GOOG), Amazon ($AMZN), Nvidia ($NVDA), and Tesla ($TSLA), also known as MAMGANT or Magnificent 7. In the past years from January 2022 to December 2024, the Magnificent 7 delivered a hefty stock market return of 41% (versus only 17% for the other 493 stocks in the S&P 500 index). As of early-March 2025, the S&P 500 index shows substantial stock market concentration. Specifically, the top 10 stocks account for more than 35% of S&P 500 market capitalization. Historically, the top 10 stocks represented more than 20% of S&P 500 market capitalization over the past few decades. Further, the market capitalization of the largest stock relative to the top quartile stock now shows the highest level of stock market concentration since 1932. Although there has been no clear relationship between stock market concentration and near-term return performance, some economists and institutional investors express their concern about increasingly higher stock market concentration in NYSE and Nasdaq. Solid sales and profits in Corporate America can help substantially boost the S&P 500 index, perhaps from 6,000 points to 6,500 points, in the next few years. In this positive light, we can expect S&P 500 stocks, specifically the Magnificent 7 tech titans, to out-perform with a hefty 9% average return per annum in the next few years. Our fundamental analysis combines our proprietary alpha stock signals with ESG scores to lend credence to some of the tech titans in S&P 500 and more broadly Corporate America, especially the top tech titans with significant AI-driven technological advancements.

Stock market investors need not worry about higher market concentration in the longer term. American history shows that high stock market concentration usually leads to lower average returns ceteris paribus over longer investment horizons. When we add market concentration as a distinct variable to the long-run stock market return model, the model forecasts average S&P 500 annual returns of 3%-5% in each decade. Although this subpar return performance falls short of the historical average return of 11% for S&P 500, this drag on long-run returns arises from the greater volatility of tech titan stock returns. In recent times, the current higher stock market valuations of the Magnificent 7 tech titans now appear to embed greater growth expectations in relation to the recent AI-led stock market rally. From Apple ($AAPL), Amazon ($AMZN), and Microsoft ($MSFT) to Meta ($META) and Google ($GOOG), these tech titans rely upon the steady flows of high-end semiconductor microchips, graphical processing units (GPU), and several other quantum advances to make iterative continuous improvements for their Generative AI large language models (Gen AI LLM). As of mid-March 2025, we believe the current Gen AI LLM bellwethers include: Google Gemini, Meta Llama, Microsoft-OpenAI ChatGPT, Anthropic Claude, Perplexity, Alibaba Qwen, DeepSeek, Amazon Nova, Mistral, and Twitter xAI Grok.

After all, stock market concentration per se should not be a major concern for U.S. investors. This concentration often turns out to be a mainstream mechanical result of winner-takes-all sales and profits in AI-driven markets such as Internet search, text, voice, vision, video, and some smart combinations of these common forms of content generation. Specifically, stock market concentration need not heighten the 2 key types of stock market risks: fundamental risks and disequilibrium risks. The former relate to unlikely structural declines in fundamental sales and profits for S&P 500 tech titans, and the latter relate to short-term deviations from fair market values. Although some of the S&P 500 tech stocks seem to reach a new steady state of stock market over-valuation, we believe the vast majority of S&P 500 tech titans can benefit substantially from the broader AI stock market rally to explore new niche markets for both institutional investors and retail investors. In a positive light, stock market concentration need not be a major concern for U.S. investors in a fundamental view. However, we believe U.S. investors should refrain from placing big bets on the recent extreme winners, because their substantially higher market valuations may or may not justify their fundamental forces in the broader context of medium-term competitive threats. At least some of the recent AI-driven winners cannot sustain their greater growth expectations and longer-term competitive advantages. It takes time for U.S. investors to better assess whether each of these AI-driven winners passes the baseline proof of concept for the optimal product-market fit.

Over the past 60 years, no more than 3% of S&P 500 companies were able to sustain 20%+ sales growth for 10 consecutive years. We can back up this empirical result with Jim Collins’s seminal research on what makes great companies tick in his strategic management books: Built to Last, Good to Great, Great by Choice, and Beyond Entrepreneurship 2.0. Therefore, it is hard for the recent AI-driven tech winners to sustain their stock market outperformance in the long run. For at least some of these recent growth stocks, the probable mean reversion of returns can result in future under-performance, especially when their future fundamental sales and profits dwindle, dry up, and then fail to allow these recent winners to dominate in the respective AI-driven markets and adjacent niche segments.

The U.S. regulators should step in when the AI-driven tech titans use their market power to stave off both their rivals and competitors with higher product prices. To the extent that stock market concentration may stifle subsequent disruptive innovations, the Securities Exchange Commission (SEC), Federal Trade Commission (FTC), and Department of Justice (DoJ) etc should introduce new antitrust rules and regulations to make American tech titans face fierce competitive pressure with no clear dominance in any particular AI-driven market. The classic examples include: Apple App Store and Google Play in the mobile software market; Amazon e-commerce in the retail market for consumer goods; Nvidia GPUs, microchips, and several other hardware advances in the semiconductor industry; and Tesla in the global market for electric vehicles (EV) and autonomous robotaxis (AR).

This current high stock market concentration serves as one of the mainstream reasons for U.S. investors to further diversify exposures across asset classes, regions, and strategies. The historically optimal portfolio mix of 60% stocks and 40% bonds remains empirically valid, relevant, profitable, and reasonable in a fundamental view. In light of the still-solid sales and profits in the AI-driven sections of Corporate America, we believe the optimal portfolio combo of 60% stocks and 40% bonds continues to serve as the mainstream economic engine for the global asset management industry, specifically BlackRock, State Street, and Vanguard. U.S. investors need to revisit their optimal choices of AI-driven stocks with new fundamental competitive moats, substantial safety margins, positive network effects, cost economies, and information cascades.

Below we provide hyperlinks to many other recent podcasts, surveys, research articles, and blog posts on global macro-finance, asset return prediction, trade, technology, fiscal-monetary policy coordination, and fundamental industry analysis for stock market investors worldwide. Key technological advancements include generative artificial intelligence (Gen AI) large language models (LLM), electric vehicles (EV), autonomous robotaxis (AR), virtual reality (VR) headsets, semiconductor microchips, high-speed broadband networks, telecoms, cloud services, social media platforms, quantum computers, and pharmaceutical treatments, medications, and therapies.

American exceptionalism often turns out to be the heuristic rule of thumb for better economic growth, low and stable inflation, full employment, and macro-financial stability.

In the broader modern monetary policy context, central banks learn to weigh the trade-offs between output and inflation expectations and macro-financial stress conditions.

Today, tech titans, billionaires, serial entrepreneurs, and venture capitalists continue to reshape and even disrupt global pharmaceutical investments for both better healthspan and longer lifespan.

Artificial intelligence continues to reshape the current global market for better biotech advances, medical innovations, and healthcare services.

The global market for GLP-1 anti-obesity weight-loss treatments now grows substantially to benefit more than 1 billion people worldwide by 2030.

Is higher stock market concentration good or bad for Corporate America?

Geopolitical alignment often reshapes and reinforces asset market fragmentation in the broader context of financial deglobalization.

The global cloud infrastructure helps accelerate the next high-tech revolutions in electric vehicles (EV), virtual reality (VR) headsets, artificial intelligence (AI) online services, and the metaverse.

The new homeland industrial policy stance tilts toward greater global resilience across the major high-tech supply chains worldwide.

China poses new threats to the U.S. and its western allies.

How can generative AI tools and LLMs help enhance human productivity?

What are the macrofinancial ripple effects of central bank digital currency (CBDC) design, issuance, and broad user adoption?

Both BYD and Tesla have become serious global manufacturers of electric vehicles (EV) worldwide.

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

Is higher stock market concentration good or bad for Corporate America? - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

This article delves into the pros and cons of increasingly higher stock market concentration in Amer...

https://ayafintech.network/blog/is-higher-stock-market-concentration-good-or-bad-for-corporate-america/
Comment

Olivia London

2025-05-17 02:50:53

Bullish

Quantitative fundamental analysis

Our new podcast deep-dives into how the global market for GLP-1 anti-obesity weight-loss treatments now grows substantially to benefit more than 1 billion people worldwide by 2030.

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This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/4bz6vmI

The new third-generation GLP-1 medications for obesity treatment and weight loss treatment, Novo Nordisk’s Wegovy and Eli Lilly’s Zepbound, now begin to become more prevalent and more pervasive worldwide. These medications show far higher weight loss efficacy than prior first-generation and second-generation medications. The latest GLP-1 medications further show long prevalent safety track records for the treatments of diabetes, heart diseases, and several kinds of cancers. However, the current U.S. prices for these new GLP-1 medications are extremely high (about $15,000 per patient per year). In the meantime, not all people with obesity can take these new GLP-1 medications because they are now prohibitively costly and U.S. insurance coverage remains partial and incomplete. Despite these current hurdles, obstacles, and impediments for broader GLP-1 drug adoption, we now expect the global market for GLP-1 obesity and weight loss medications to grow substantially to benefit more than 1 billion people with obesity worldwide by 2030.

GLP-1 medications are the first in a long history of weight loss medications to target the critical brain pathways that regulate both food intake and energy storage. As a result, GLP-1 patients feel less hungry and so crave food much less. As the third-generation medications for obesity treatment, these new GLP-1 medications often lead to 23%-25% average weight losses among GLP-1 patients (versus the single-digit average weight losses of prior medications).

While GLP-1 medications show tremendous promise in weight loss treatment, the global market for these new medications remains only a fraction of all of the people with obesity worldwide. Some patients are not medically able to take these GLP-1 medications, especially since each of these medications requires an injection by a needle. Also, these latest GLP-1 medications are shown to be effective only when patients continue to take these medications almost on a daily basis. A current lack of comprehensive insurance coverage by Medicare, Medicaid, and private insurers remains a major obstacle to wider GLP-1 drug adoption and usage in America and other countries. The current healthcare insurance programs only cover GLP-1s for the wider treatments of obesity-driven diseases such as diabetes, heart diseases, and some types of cancers, but there is now no insurance coverage solely for the treatment of obesity alone.

In addition to supply chain shortages and bottlenecks for GLP-1 mass production, the current hurdles, obstacles, and impediments impose hard high-cost limits and constraints on the size of the global market for GLP-1 medications in the near-to-medium term. Some recent estimates show that the U.S. GLP-1 patient population is likely to grow substantially from 2 million people with obesity today to at least 15 million people with obesity in 2030 (about 15% of the U.S. adults with obesity). On the basis of these recent estimates, we can now expect the global market for GLP-1 medications to increase substantially from $10 billion today to almost $100 billion by 2030.

Over the next few years, we expect U.S. employer insurance coverage for GLP-1 medications to increase substantially from approximately 50% of U.S. employers today due to greater U.S. employee healthcare needs and the significantly positive health benefits of GLP-1 medications. As several pharmaceutical titans direct their R&D efforts into some further developments of GLP-1 medications, it is reasonable for investors to expect more intense competition to result in lower prices for GLP-1 medications. Further, the new GLP-1 treatments of other obesity-driven diseases, specifically heart diseases, diabetes, and some types of cancers etc, can go a long way in empowering Medicare, Medicaid, and numerous private insurers to broaden their health insurance coverage of GLP-1 medications. In the meantime, however, U.S. Congress prohibits Medicare and Medicaid from covering GLP-1 medications today because of their budget-busting sky-high prices.

We can expect U.S. health insurance coverage to broaden substantially if the new GLP-1 medications show promise in treating serious health conditions well beyond obesity. Additional health conditions can include heart diseases, diabetes, as well as some kinds of cancers. The FDA’s recent approval of Novo Nordisk’s Wegovy, semaglutide, for the treatment of heart diseases has led to Medicare coverage of Wegovy for this new indication. Current studies for the treatments of sleep apnea, liver impairment, and other diseases can result in similarly favorable outcomes of broader Medicare coverage of GLP-1 medications. Some recent positive estimates show that the wider GLP-1 treatments of diseases can probably benefit 70 million obese U.S. patients by 2030. These positive ripple effects and chain reactions can cause greater economic benefits beyond the biotech and pharmaceutical sectors. As a result of GLP-1 medications with higher weight-loss efficacy, U.S. adults with prior obesity would have substantially greater and broader needs and demands for day-to-day food items, beverages, many other consumer staples, beauty products, and even air travel round-trips.

With the concomitant positive health improvements, the next widespread adoption of GLP-1 medications can cause better economic growth, employment, and labor productivity in America. U.S. GDP can probably rise by 0.5 to 2 percentage points in the long run if at least 30 million U.S. adults with obesity take these medications. Specifically, U.S. GDP can increase more substantially by 1.35 to 2.55 percentage points if all 70 million U.S. adults with obesity take such medications. However, the American government would face fiscal strain if both Medicare and Medicaid start to provide complete health insurance coverage to 40% of U.S. adults with obesity. This fiscal strain would likely amount to $1 trillion per year if all 40% of U.S. adults with obesity take GLP-1 medications at the current high prices ($15,000 per patient per year). This dollar amount is about the current size of Medicare and about 20% of how much Americans spend on healthcare each year. Although there are clear health benefits for U.S. adults with obesity to take GLP-1 medications, broad health insurance coverage would be enormously expensive for the U.S. government. We believe the next wave of GLP-1 technological advancements can help alleviate this fiscal concern for smarter and better healthcare solutions to weight loss treatments in due course.

Below we provide hyperlinks to many other recent podcasts and articles on global macro-finance, asset return prediction, and fundamental industry analysis for stock market investors.

American exceptionalism often turns out to be the heuristic rule of thumb for better economic growth, low and stable inflation, full employment, and macro-financial stability.

In the broader modern monetary policy context, central banks learn to weigh the trade-offs between output and inflation expectations and macro-financial stress conditions.

Today, tech titans, billionaires, serial entrepreneurs, and venture capitalists continue to reshape and even disrupt global pharmaceutical investments for both better healthspan and longer lifespan.

Artificial intelligence continues to reshape the current global market for better biotech advances, medical innovations, and healthcare services.

The global market for GLP-1 anti-obesity weight-loss treatments now grows substantially to benefit more than 1 billion people worldwide by 2030.

Is higher stock market concentration good or bad for Corporate America?

Geopolitical alignment often reshapes and reinforces asset market fragmentation in the broader context of financial deglobalization.

The global cloud infrastructure helps accelerate the next high-tech revolutions in electric vehicles (EV), virtual reality (VR) headsets, artificial intelligence (AI) online services, and the metaverse.

The new homeland industrial policy stance tilts toward greater global resilience across the major high-tech supply chains worldwide.

China poses new threats to the U.S. and its western allies.

How can generative AI tools and LLMs help enhance human productivity?

What are the macrofinancial ripple effects of central bank digital currency (CBDC) design, issuance, and broad user adoption?

Both BYD and Tesla have become serious global manufacturers of electric vehicles (EV) worldwide.

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

The global market for GLP-1 weight-loss medications can grow substantially to benefit more than 1 billion people worldwide by 2030. - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

The global market for GLP-1 anti-obesity weight-loss medications remains in a rare unique situation ...

https://ayafintech.network/blog/the-global-market-for-GLP-1-weight-loss-medications-grows-substantially-to-benefit-1-billion-people-worldwide-by-2030/
Comment

James Campbell

2025-03-05 10:14:17

Bearish

Hybrid analysis

Our latest podcast deep-dives into the recent empirical results in relation to corporate payout management (specifically, cash dividends and share repurchases).


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#residualvariance #fibonacci #bollinger #murphyrank #sma #ema #macd #rsi #issuance #accrual #pivot 

The original blog article is available on our AYA fintech network platform. https://ayafintech.network/blog/corporate-payout-management/

This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/3PZJQ9a

This corporate payout literature review rests on the recent survey article by Farre-Mensa, Michaely, and Schmalz (2014). Out of the conventional motives of why the typical firm makes cash payout in the form of both dividends and repurchases (cf. the agency, signaling, and tax stories), the cross-sectional evidence is most persuasive in favor of agency considerations. Some recent studies of the May 2003 dividend tax cut sconfirm that differences in the separate taxation of dividends and capital gains have at best a second-order impact on setting corporate cash payout. None of the conventional payout explanations can account for the secular changes in how corporate payout materializes over the past few decades. During this time, share repurchases have replaced dividends as the primary vehicle for corporate payout (Fama and French, 2001; DeAngelo, DeAngelo, and Skinner, 2004; Skinner, 2008). More recent theoretical and empirical developments of corporate payout literature focus on cash distributions of regular and smooth dividends and market-timing repurchases as an integral part of the firm’s larger financial ecosystem with important implications for corporate investment, capital structure, cash management, risk management, managerial rent protection, and corporate ownership and governance (e.g. Lambrecht and Myers (2012, 2015)).

Farre-Mensa, Michaely, and Schmalz (2014) summarize several primary empirical facts about corporate cash distributions. Corporate cash distributions entail substantial dollar amounts that reflect large wealth transfers in the economy. For instance, U.S. public firms pay $800+ billion in dividends and repurchases. For better exposition, the bullet points below sum up these empirical facts:

Share repurchases have increased substantially to dominate dividends as the major form of corporate payout since 2004. Now more firms repurchase shares than pay cash dividends, and firms distribute more cash to their shareholders via stock buyback than dividend payout (DeAngelo, DeAngelo, and Skinner, 2004; Skinner, 2008).

The number of public firms that pay cash dividends has substantially decreased from the mid-1980s to the early-2000s, and this trend has reversed with the reappearance of dividends in the past decade because public firms need to pay out conventional cash dividends to assure outside investors when these firms mature over their financial lifecycle (Fama and French, 2001; DeAngelo, DeAngelo, and Skinner, 2004; Julio and Ikenberry, 2004). Large and profitable firms pay more dividends than risky firms that face more growth opportunities (Fama and French, 2001; DeAngelo, DeAngelo, and Skinner, 2004; Skinner, 2008). Share repurchases are more widespread across firms than dividends while a relatively small number of firms pay out most aggregate dividends. Specifically, the top 25 firms pay out well more than half of aggregate dividends. This dividend concentration is an empirical observation that cannot be easily explained by a lower propensity for the typical firm to pay cash dividends or a structural shift in the composition of new lists (Fama and French, 2001; DeAngelo, DeAngelo, and Skinner, 2004).

A robust pattern that has persisted over the last century is that corporations reveal a firm commitment to maintaining the level of dividend payout. Regular cash dividends are sticky and smooth over time, particularly among large and profitable firms (Lintner, 1956; Skinner, 2008; Michaely and Roberts, 2011; Leary and Roberts, 2011). In contrast, share repurchases are heavily pro-cyclical and tend to exhibit much more variability throughout the business cycle (Grullon and Michaely, 2002, 2004).

The typical firm’s stock buyback decision does not exclusively reflect a desire to pay out excess cash to shareholders. Rather, the desire to undo the EPS dilution that arises from stock option exercises or direct equity grants to employees, executive managers, and directors appears to play a first-order role in the share repurchase decision (Bens, Nagar, Skinner, and Wong, 2003).

The stock market reacts positively to increases in both dividend payout and share buyback. Also, the stock market responds negatively to decreases in both dividend payout and share buyback. Moreover, the stock market reaction to dividend increases and decreases is asymmetric: the average abnormal returns in response to dividend increases and decreases are 1.34% and –3.71% respectively (Grullon, Michaely, and Swaminathan, 2002). There is some evidence in support of a high propensity for the typical firm to cater to relative stock market misvaluation that reveals either a dividend premium or a dividend discount. In the former case of a dividend premium, the median firm is inclined to initiate dividend payout. In the latter case of a dividend discount, however, the median firm appears to omit dividend payout. This behavioral catering theory predicts binary dividend initiation or omission but not the magnitude of dividend payout (Baker and Wurgler, 2004, 2012).

The evidence supports the agency prediction that most firms use corporate payout to reduce potential overinvestment by corporate incumbents (Ikenberry, Lakonishok, and Vermaelen, 1995; Nohel and Tarhan, 1998). Firms increase their cash distributions when these firms mature over time (DeAngelo, DeAngelo, and Skinner, 2004; Julio and Ikenberry, 2004). The stock market reacts positively to high dividend payout and share buyback that these mature and profitable firms initiate with their abundant free cash flows (Grullon and Michaely, 2004; Baker and Wurgler, 2004, 2012).

Fama and French (2001) empirically find that the fraction of public firms that pay out cash dividends has decreased substantially from 66.5% in 1978 to 20.8% in 1999. Part of this decline is due to a structural shift in the population of public firms toward small firms with low profitability and robust asset growth. This structural shift arises from an explosion of new lists from 3,638 in 1978 to 5,670 in 1997. The low profitability of these new lists explains at least part of the decline in the fraction of public dividend payers.

Furthermore, Fama and French (2001) run logit regressions to gauge the propensity for the typical firm to pay out cash dividends. After the econometrician controls for a unique set of firm characteristics such as profitability, asset growth, market-to-book, and size, the typical firm’s much lower propensity to pay out dividends explains half of the drastic decline in the fraction of public dividend payers. Specifically, the typical firm’s propensity to pay cash dividends declines by about 25% while the actual decline in the fraction of public dividend payers is nearly 50%. In essence, this lower propensity to pay out dividends is as important as the structural shift in firm composition in explaining the decrease in the proportion of public dividend payers.

Grullon and Michaely (2002) and DeAngelo, DeAngelo, and Skinner (2004) empirically report that the decline in the number of public dividend payers suggests an increase in the overall dividend concentration with a 22.7% increase in the real dollar amount of dividend payout by industrial firms from 1978 to 2000. Also, Grullon and Michaely (2002) propose the substitution hypothesis that many public firms nowadays successfully substitute cash dividends with share repurchases as the dominant form of corporate payout. DeAngelo, DeAngelo, and Skinner (2004) wisely observe that the large reduction in the number of public dividend payers occurs almost entirely among firms that pay relatively small dividends while there is a simultaneous substantial increase in cash dividend payout by the largest dividend payers. As a result, the increase in real dividend payout by large and more profitable firms at the top of the dividend distribution swamps by a broad margin the reduction in real dividend payout by small and unprofitable firms at the bottom of the dividend distribution. During the same time period, the aggregate increase in net income significantly outpaces the increase in real dividend payout and thus results in a systemic decline in both the dividend payout ratio and the dividend yield (Grullon and Michaely, 2002).

DeAngelo, DeAngelo, and Skinner (2004) find that NYSE firms pay the majority of industrial dividends. This empirical fact suggests the tendency for older and more stable firms that pay regular dividends to list their shares on NYSE. In contrast, young and risky firms that are less likely to pay regular dividends list their shares on AMEX and NASDAQ. Dividend concentration can arise from the recent concentration of corporate income supply (Linter, 1956; DeAngelo, DeAngelo, and Skinner, 2004). The top 25 dividend payers distribute more than 55% of the aggregate cash dividends. It is noteworthy that 14 of these top 25 dividend-payers are large, stable, and mature Dow Jones industrial firms. However, the vast majority of dividend non-payers are high-tech growth firms with high future income potential. In essence, DeAgnelo, DeAngelo, and Skinner’s (2004) empirical results help demystify the puzzle of *dividend disappearance* from Fama and French’s (2001) landmark study.

Skinner (2008) empirically finds that changes in the corporate income cross-section help explain changes in both dividend payout and share buyback from 1980 to 2005. Moreover, share repurchases increasingly substitute for dividends (both for dividend payers and sole share repurchasers). A special group of firms comprises profitable firms that pay both smooth annual dividends and regular repurchases. These firms dominate the distribution of both corporate net income and dividend payout, with well over half of these aggregates in the recent years. These firms commit to their regular dividend distributions mainly due to an implicit obligation to continue this dividend smoothing practice (Brav, Graham, Harvey, and Michaely, 2005). While these profitable firms use both cash payout mechanisms, these firms increasingly substitute share repurchases for dividends. Over the biennial window, corporate income helps explain the variation in the level of stock buyback, and corporate managers time repurchases over this period (Brav, Graham, Harvey, and Michaely, 2005; Peyer and Vermaelen, 2009). Share repurchases are flexible enough to boost earnings per share (EPS) (Bens, Nagar, Skinner, and Wong, 2003) or to distribute cash for the avoidance of potential agency conflicts (Jensen, 1986; Harford, Humphery-Jenner, and Powell, 2012).

Over the period from 1980 to 2005, firms that only pay dividends have declined from 13% to 7% of the number of firms and from 8% to 2% of all dividend and repurchase distributions. This evidence further supports the secular trend that repurchases substitute for dividends. Overall, Skinner’s (2008) empirical results accord with the substitution hypothesis that share repurchases have become the dominant form of corporate payout in comparison to cash dividends. The use of share repurchases as the dominant payout mechanism at least partly helps demystify the EPS dilution puzzle.

Biennial Lintner (1956) regressions of changes in dividend or total payout on both corporate income and past dividend or total payout suggest a structural shift in the empirical relation between corporate income and cash payout. Over the subperiods 1980-1994 to 1995-2005, the dividend mean-reversion is slow and steady at a rate less than –25% while the total payout mean-reversion has significantly increased in speed from –31% to –71%. While the typical firm pays a cash dividend of 9 cents per dollar of corporate income in 1980-1994 and a cash dividend of 17 cents per dollar of corporate income in 1995-2005 (p-value>0.27), the typical firm’s total payout increases from 26 cents per dollar of corporate income in 1980-1994 to 56 cents per dollar of corporate income in 1995-2005 (p-value<0.01). In this light, Skinner (2008) attributes this significant difference to the discretionary use of share repurchases. Total payout more closely tracks corporate income over time since the typical firm increasingly uses stock buyback to absorb the variation in corporate income. In sum, dividend payments increase smoothly over time and are largely independent of the variation in corporate income while share repurchases increasingly absorb this variation.

Bliss, Cheng, and Denis (2015) report significant reductions in both dividend payout and share buyback during the 2008-2009 financial crisis. Repurchase reductions prevail to a larger extent than dividend cuts. Payout reductions are more likely in firms with higher leverage, more valuable growth options, and lower cash balances (i.e. these firms are more susceptible to the negative consequences of an external financing shock). Firms appear to use the proceeds from payout reductions to maintain cash reservoirs for financing future firm investment opportunities. In this light, an external shock to the supply of credit (net of demand effects) during the financial crisis increases the marginal benefit of cash retention. Payout reductions in general, and repurchase reductions in particular, serve as a substitute form of corporate finance.

During the 2008-2009 financial crisis, the percentage of firms that either reduce or eliminate dividends increases from 6% in 2006 to 25% in 2009 while the percentage of firms that curb repurchases increases from 52% in 2006 to 89% in 2009. In contrast to cash dividends, share repurchases can be viewed as a flexible form of corporate payout. Bliss, Cheng, and Denis’s (2015) logit regressions of the indicator for payout reductions as well as panel regressions of payout reductions shed light on the evidence of payout reductions as a substitute form of corporate finance. This result echoes some recent studies of corporate cash and payout decisions (Brav, Graham, Harvey, and Michaely, 2005; Campello, Graham, and Harvey, 2010; Leary and Michaely, 2011; Almeida, Campello, and Weisbach, 2004; Faulkender and Wang, 2006; Bates, Kahle, and Stulz, 2009; Harford, Mansi, and Maxwell, 2014; La Porta, Lopez-de-Silanes, Shleifer, and Vishny, 2000; Dittmar and Mahrt-Smitth, 2007; Harford, Mansi, and Maxwell, 2008):

To the extent that corporate incumbents have a high propensity to smooth regular dividend payments, Brav, Graham, Harvey, and Michaely (2005) document survey evidence that CFOs would rather cut investment than cut dividend payout when their firms face severe financial constraints. Further, these CFOs view the financial flexibility of share buyback as one of its primary attributes. This flexibility distinguishes share buyback from dividend payout, the latter of which induces the firm to commit to the same or even higher dividend payout in the future.

According to Campello, Graham, and Harvey’s (2010) survey evidence, CFOs note that firms often bypass attractive and valuable investment opportunities due to borrowing constraints during a major financial crisis. Leary and Michaely (2011) observe that unlike the case for cash dividends, corporate managers do not appear to make any attempt to smooth share repurchases through time. Bliss, Cheng, and Denis’s (2015) empirical results fit well with this general observation because the financial flexibility that arises from payout reductions during the financial crisis originates primarily from reductions in share repurchases. In comparison, dividend cuts are one of the more costly sources of financial flexibility.

Under the precautionary motive for holding cash, firms build up cash stockpiles as a valuable buffer against exogenous shocks to corporate cash flows or investment opportunities. Hence, firms tend to hold greater cash balances when these firms face more costly external finance, when corporate cash flows are more volatile, and when firm investment opportunities are more valuable. Several recent studies suggest that cash balances positively correlate with cash flow volatility, market-to-book, and multiple measures of constrained access to external capital (Opler, Pinkowitz, Stulz, and Williamson, 1999). Over the past few decades, the dramatic increase in corporate cash retention is attributable to a sharp increase in cash flow volatility (Bates, Kahle, and Stulz, 2009). Also, firms exhibit a greater propensity to save cash from their cash flows when these firms face higher costs of external finance (Almeida, Campello, and Weisbach, 2004). Moreover, the marginal value of cash is greater in firms with limited access to external capital markets than in firms that face less severe financial constraints (Faulkender and Wang, 2006). All this evidence bolsters the precautionary motive story for corporate cash retention.

Corporate managers have some perverse incentives to retain excessive free cash flows because this excess enables incumbents to divert corporate resources for greater private benefits of control to the detriment of outside investors (Jensen, 1986; Stulz, 1990; La Porta, Lopez-de-Silanes, Shleifer, and Vishny, 2000). In accordance with this agency story of free cash flows, Harford, Mansi, and Maxwell (2008) empirically find that firms with weak corporate governance spend excess cash on acquisitions and capital expenditures more quickly than do firms with better corporate governance. Furthermore, Dittmar and Mahrt-Smith (2007) find that every one dollar of cash in poorly governed firms is worth only 42-88 cents while good governance doubles this cash value. Firms with poor governance tend to dissipate cash quickly in several ways that significantly hurt operating performance. This negative impact of excessive cash reserves on future operating performance can be cancelled out if the typical firm improves its governance practices.

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

Corporate payout management - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

Corporate payout management

https://ayafintech.network/blog/corporate-payout-management/
Comment

Apple Boston

2025-02-24 02:16:02

Bullish

Quantitative fundamental analysis

Our latest podcast deep-dives into the recent empirical results in relation to corporate diversification, with a special emphasis on both the bright and dark sides of internal capital markets. The bright-side view posits that internal capital markets benefit from stronger control rights and fewer information asymmetries across intra-firm divisions while this benefit in turn enables the CEO to make better fund allocation decisions. In contrast, the dark-side view suggests that internal capital markets suffer from the agency motives of both divisional managers and the CEO who might prefer to pursue their private interests. Several recent empirical studies delve into the delicate balance between the bright and dark sides of internal capital markets.

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The original blog article is available on our AYA fintech network platform. https://ayafintech.network/blog/corporate-diversification-theory-and-evidence/

This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/4hhxUMf

A recent strand of corporate diversification literature spans at least three generations. The first generation suggests that corporate diversification typically erodes firm value. The entire firm value is less than the sum of the imputed values of different segments. The diversification discount is 12%-15% of Tobin’s q (e.g. Lang and Stulz (1994) and Berger and Ofek (1995)). Also, the second generation suggests that the diversification discount is at least partly attributable to the use of anti-takeover provisions, which insulate incumbents from the direct influence of hostile takeovers and hence result in poor corporate governance (Hoechle, Schmid, Walter, and Yermack, 2012). Finally, the third generation sheds fresh light on the role of internal capital markets that help transfer valuable capital from one division to another division within the same enterprise (e.g. Duchin (2010) and Duchin and Sosyura (2013)). Both the bright and dark sides of internal capital markets warrant attention from corporate decision-makers.

Lang and Stulz (1994) empirically find that corporate diversification erodes firm value. The typical firm decides to diversify into some other industry segments when there are few internal investment growth opportunities. On average, the firm diversification discount is about 12%-15% of Tobin’s q. Furthermore, Berger and Ofek (1995) report that the diversification discount is much smaller when this diversification occurs in somewhat related industry segments at the 2-digit SIC codes. Also, overinvestment and cross-subsidization contribute to the loss of firm value that arises from corporate diversification.

More recent empirical studies suggest that firm diversification occurs endogenously in response to both corporate value and governance (Campa and Kedia, 2002; Graham, Lemmon, and Wolf, 2002; Villalonga, 2004). Valid instruments are the lags of firm performance, corporate governance, and several other firm attributes (Wintoki, Linck, and Netter, 2012). In the special case of both international and U.S. financial conglomerates, Laeven and Levine (2007) and Schmid and Walter (2009) empirically find an increase in the diversification discount when the econometrician uses the Heckman (1979) sample selection model to account for any self-selection bias that may arise from corporate diversification.

Hoechle, Schmid, Walter, and Yermack (2012) investigate whether the diversification discount occurs as an artifact of poor corporate governance. A number of dynamic panel regressions adequately control for potential endogeneity of the typical firm’s diversification decision. The diversification discount shrinks by a full order of magnitude with the addition of governance variables such as anti-takeover provisions to the dynamic panel regressions. Differences in the quality of corporate governance across conglomerate firms can help explain at least part of the negative nexus between firm value and corporate diversification. Specifically, Hoechle, Schmid, Walter, and Yermack’s (2012) baseline panel regression model suggests that the diversification discount decreases from 15%-17% to about 13% when the econometrician adds a plethora of corporate governance variables such as institutional ownership, CEO stock ownership and its square, CEO power, and G-index of anti-takeover provisions to the panel regressions of excess value multiples to total sales or total assets with firm-specific fixed effects. If poorly governed firms often tend to diversify, perhaps through mergers, acquisitions, and overinvestments in somewhat unrelated industry segments, then the diversification discount could be the symptom of a larger problem in the fundamental context of corporate governance.

Hoechle, Schmid, Walter, and Yermack (2012) follow Campa and Kedia’s (2002) treatment of potential endogeneity by implementing the Heckman (1979) sample selection model to reassess the diversification discount. The Heckman method involves a two-step procedure that uses a probit model for the subsequent analysis of discount determinants. The econometrician first estimates the firm’s propensity to diversify with a probit model via quasi-maximum likelihood estimation. The inverse Mills ratio can be computed as the hazard rate of the probability density function (pdf) to the cumulative density function (cdf) from the first-step probit estimation. In turn, this ratio serves as an auxiliary explanatory variable in the second-step regression of excess firm value on a unique set of firm attributes. The resultant parameters would be consistent with the true counterparts (Heckman, 1979).

A firm’s current actions affect its future corporate governance and firm performance, the latter of which then affects the firm’s future actions (e.g. Hermalin and Weisbach (2004) and Wintoki, Linck, and Netter (2012)). In order to address the dynamic endogeneity issue, Hoechle, Schmid, Walter, and Yermack (2012) run the GMM panel regression model that corresponds to a dynamic system of simultaneous equations. The first step involves the inclusion of performance lags as explanatory variables in the dynamic model. The econometrician first-differences each factor to remove any unobservable heterogeneity and omitted-variables bias. Then the econometrician estimates the GMM panel regression model with the use of lags of the diversification, governance, and performance variables as well as some other firm characteristics as exogenous instruments.

While the Heckman (1979) sample selection model suggests that the diversification discount vanishes as a result of adding corporate governance variables to the set of explanatory variables, the dynamic GMM panel regressions produce a smaller but still significant diversification discount. Specifically, the GMM estimate of diversification discount decreases from 12% (t-ratio>2) to 7.6% (t-ratio<2) with the addition of corporate governance variables. Overall, poor corporate governance helps explain at least part of the corporate diversification discount.

Masulis, Wang, and Xie’s (2007) event study suggests that merger announcement returns are significantly lower for acquirers with poor corporate governance structures (e.g. more anti-takeover provisions in the market for corporate control). Specifically, acquirers with more anti-takeover provisions or joint CEO-chairman positions experience significantly lower merger-announcement cumulative abnormal returns. In order to evaluate whether the diversification discount decreases with better corporate governance in merger and acquisition announcements, Hoechle, Schmid, Walter, and Yermack (2012) add the same set of governance variables plus the diversification dummy variable to the panel regressions of post-merger announcement cumulative abnormal returns within short time windows. The main evidence suggests that the negative cumulative abnormal return for corporate diversification decreases from nearly 1.2%-1.6% (t-ratio>2) to 0.3%-0.6% (t-ratio<2). This event study echoes the overarching thesis of the dynamic panel regression results that poor corporate governance helps explain at least part of the diversification discount.

A major implication of corporate diversification pertains to the precautionary demand for cash retention. According to the precautionary cash demand story (Keynes, 1936), firms hold cash to protect themselves against adverse cash flow shocks that might force these firms to forego valuable investment opportunities due to costly external finance. Some recent empirical studies of structural shifts in corporate cash reserves lend credence to the central thesis that firms increasingly hold cash for a precautionary motive while the median firm’s net debt (i.e. total debt minus cash) is below zero (Opler, Pinkowitz, Stulz, and Williamson, 1999; Almeida, Campello, and Weisbach, 2004; Bates, Kahle, and Stulz, 2009).

Well-diversified firms exhibit lower cross-divisional correlations in investment opportunities and smaller financing deficits (Duchin, 2010). These well-diversified firms enjoy the benefit of coinsurance, which reduces their exposure to risk and allows them to hold lower amounts of precautionary cash in contrast to their standalone counterparts. Multi-divisional firms hold approximately half as much cash as highly specialized firms do. The difference is largely due to corporate diversification in investment opportunities and cash flows. Well-diversified firms hold low precautionary cash balances, which in turn reflect sound governance and efficient fund transfer within these firms.

Duchin and Sosyura (2013) draw a clear distinction between the bright and dark sides of internal capital markets. The bright-side view posits that internal capital markets benefit from stronger control rights and fewer information asymmetries across intra-firm divisions while this benefit in turn enables the CEO to make better fund allocation decisions (e.g. Naveen and Tice (2001) and Maksimovic and Phillips (2002)). In contrast, the dark-side view suggests that internal capital markets suffer from the agency motives of both divisional managers and the CEO who might prefer to pursue their private interests (Scharfstein and Stein, 2000; Rajan, Servaes, and Zingales, 2000; Ozbas and Scharfstein, 2009). The relative importance of divisional managers garners practical support from the survey evidence of Graham, Harvey, and Puri (2015) who report that the CEO’s opinion of a divisional manager is the second most important factor in internal capital allocation after the net present value rule.

Duchin and Sosyura (2013) offer evidence on the watershed between the bright and dark sides of internal capital markets by constructing a hand-collected dataset of divisional managers at S&P 500 firms with managerial attributes and connections to the CEO on capital allocation decisions. In particular, Duchin and Sosyura (2013) evaluate the involvement of divisional managers in the firm via various channels, ranging from formal board membership and seniority to informal social connections to the CEO via prior employment, educational institutions, and non-profit organizations. The evidence suggests that divisional managers with social connections to the CEO receive more capital after the econometrician controls for divisional size, performance, proxies for investment opportunities, and other characteristics. One social connection between a divisional manager and the CEO correlates with 7.2% greater capital allocation to his or her division or about $4.2 million in annual expenditure in a division with median characteristics.

At well-governed firms with high information asymmetries, where divisional managers are likely to have valuable information about investment opportunities, social connections between the CEO and divisional managers significantly correlate with better investment efficiency and firm valuation. In contrast, at firms with poor governance, which are more prone to agency-driven favoritism, managerial connections to the CEO are negatively related to investment efficiency and firm value. Duchin and Sosyura’s (2013) study draws a clear empirical distinction between the bright and dark sides of internal capital markets. In this light, corporate diversification results in some costs and benefits that must be weighed against managerial connections to the CEO in different contexts.

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

Corporate diversification theory and evidence - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

Corporate diversification theory and evidence

https://ayafintech.network/blog/corporate-diversification-theory-and-evidence/
Comment

Monica McNeil

2025-02-22 02:27:01

Bearish

Quantitative technical analysis

Our latest podcast deep-dives into the recent empirical results in support of the mainstream choices, reasons, and decisions for corporate cash management.

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The original blog article is available on our AYA fintech network platform. https://ayafintech.network/blog/corporate-cash-management/

This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/3CrZEyz

The empirical corporate finance literature suggests four primary motives for firms to hold cash. These motives include the transaction motive, the tax motive, the agency motive, and the precautionary demand motive. Most classical models derive the optimal demand for cash when a firm incurs transaction costs that arise from the conversion of a non-cash asset into cash (Baumol, 1952; Miller and Orr, 1966; Mulligan, 1997). Since there are economies of scale with the transaction motive, large firms often appear to hold less cash. In addition to the transaction motive, the tax motive is another primary concern. Firms that would incur tax consequences of foreign income repatriation often hold more cash (Foley, Hartzell, Titman, and Twite, 2007). As a result, multinational firms are more likely to hoard cash for legitimate tax avoidance.

Bates, Kahle, and Stulz (2009) establish a clear distinction between the agency and precautionary demand stories of corporate cash management. According to the agency story, entrenched managers would rather retain cash than disgorge cash payout to shareholders when the firm has subpar investment opportunities (Jensen, 1986). Several recent empirical studies provide at least partial support for this agency story (e.g. Dittmar, Mahrt-Smith, and Servaes (2003), Pinkowitz, Stulz, and Williamson (2006), Dittmar and Mahrt-Smith (2007), and Harford, Mansi, and Maxwell (2008)). In contrast to the agency story, the alternative precautionary cash demand story suggests that firms hoard cash to better cope with adverse shocks when it is costly to access capital markets. Firms with risky cash flows and poor access to external capital hold more cash (Opler, Pinkowitz, Stulz, and Williamson, 1999). Some theoretical models further support the nexus between financial constraints and cash reserves (e.g. Acharya, Almeida, and Campello (2007) and Riddick and Whited (2009)).

Bates, Kahle, and Stulz (2009) empirically investigate how the cash stockpiles of U.S. firms have evolved since 1980 and whether this evolution can be explained by changes in the determinants of cash reserves. The average cash-to-assets ratio for American firms has more than doubled from 1980 to 2006. In terms of the economic importance of this trend, the average firm can retire all the debt obligations with its cash stockpiles. The cash-to-assets ratio increases because the typical firm’s cash flows have become riskier. The typical firm retains fewer inventories and accounts receivables and tends to be more R&D-intensive. Share issuance has become an increasingly important source of cash for firms with precautionary motives due to large R&D expenditures and volatile cash flows. Precautionary motives dominate agency conflicts in explaining the increase in the cash-to-assets ratio.

A plausible explanation for the secular increase in cash reserves for non-dividend payers pertains to the precautionary demand for cash: firms hoard cash as a buffer to insulate against adverse shocks. A well-known empirical fact is that idiosyncratic risk has substantially increased over time (Campbell, Lettau, Malkiel, and Xu, 2001). The average cash ratio increases by less than 50% for firms with the smallest increase in idiosyncratic risk but by almost 300% for firms with the largest increase in idiosyncratic risk. This increase in cash intensity closely relates to the joint themes of disappearing dividends and new stock exchange lists with more volatile cash flows (Fama and French, 2001, 2004; DeAngelo, DeAgnelo, and Skinner, 2004). Ceteris paribus the average cash-to-assets ratio increases by more than 2% from 1980 to 2006 due to the increase in cash flow volatility (cf. the precautionary demand for cash) while the average cash-to-assets ratio is 23.2% in 2006.

Bates, Kahle, and Stulz (2009) present persuasive descriptive statistics in support of the secular increase in cash intensity from 1980 to 2006. The increase in cash-to-assets is not driven by the largest firms, and is more pronounced in smaller firms. This trend is robust to IPO issuance, dividend status, and operating performance. Firms become less likely to pay dividends and thus are inclined to hoard more cash (Fama and French, 2001). Non-dividend payers with fewer investment opportunities appear to accumulate more cash (Jensen, 1986). While these descriptive statistics seem to highlight the agency story as the smoking gun, financial constraint risk can be an equally plausible explanation for the secular increase in corporate cash intensity (Almeida, Campello, and Weisbach, 2004). Because financial constraints induce the firm to save cash out of cash flows (cf. the cash flow sensitivity of cash), financially constrained firms should face a positive cash flow sensitivity of cash while unconstrained firms do not face any systematic relation between cash reserves and cash flows.

Bates, Kahle, and Stulz (2009) cleverly find the Achilles heel in the central prediction of the agency story: entrenched managers are likely to retain free cash flows without significant payout to shareholders, thus the agency story predicts a higher increase in cash-to-assets in the top G-index quintile with more anti-takeover provisions (Gompers, Ishii, and Metrick, 2003). Yet, Bates, Kahle, and Stulz’s (2009) empirical results contradict this prediction. While each G-index quintile experiences an increase in the mean cash-to-assets ratio, this increase is more pronounced for the lower G-index quintiles. Also, firms that land in the highest G-index quintile with the highest level of managerial entrenchment hold the least amount of cash. This evidence shoots a straight shot at the heart of the agency hypothesis and instead supports the alternative story of precautionary demand for cash.

Bates, Kahle, and Stulz (2009) regress each firm’s market value on a unique set of explanatory variables such as cash stockpiles and their interactions with binary decade variables. A higher mean cash-to-assets ratio correlates with higher firm valuation. The average cash-to-assets ratio positively interacts with the binary decade variables, so the increase in cash reserves contributes to higher firm valuation over time. This evidence refutes the central prediction of the agency story that the value of cash stockpiles declines when the firm accumulates more free cash flows over time. Bates, Kahle, and Stulz’s (2009) empirical thesis differs from a recent strand of corporate cash management literature that investors in regimes with poor governance cannot induce incumbents to disgorge cash balances while firms with weak governance dissipate excess cash flows more quickly than firms with robust governance (Dittmar, Mahrt-Smith, and Servaes, 2003; Pinkowitz, Stulz, and Williamson, 2006; Dittmar and Mahrt-Smith, 2007).

Harford, Mansi, and Maxwell (2008) study how agency problems affect the typical firm’s propensity to stockpile cash reserves (Jensen and Meckling, 1976; Jensen, 1986). Specifically, Harford, Mansi, and Maxwell (2008) analyze the empirical nexus between corporate governance structures and cash reserves and its implications for corporate investment, payout, and firm value. Firms with weaker governance (i.e. more anti-takeover provisions and lower incumbent equity stakes) hoard smaller cash reserves because entrenched managers tend to spend cash quickly on M&A activities and capital expenditures. Also, firms with weaker governance metrics choose to repurchase stock rather than increase dividend payout. Lastly, excess cash correlates with lower firm value, thus most of the cash-led M&A and capital overinvestments are suboptimal. Harford, Mansi, and Maxwell’s (2008) empirical study offers an ingenious resurrection of the agency story of managerial entrenchment and excess cash utilization.

Jensen (1986) and Stulz (1990) develop the free cash flow hypothesis and then predict that shareholders choose to limit managerial access to free cash flow to mitigate agency conflicts. Shareholders assign a lower value to an additional dollar of cash reserves when agency problems are likely to be more severe at the firm (Dittmar and Mahrt-Smith, 2007). Cross-country evidence suggests that greater shareholder rights tend to correlate with lower cash stockpiles (Dittmar, Mahrt-Smith, and Servaes, 2003). Beyond the main prediction of the agency hypothesis, firms often hoard cash due to a precautionary motive (Opler, Pinkowitz, Stulz, and Williamson, 1999; Bates, Kahle, and Stulz, 2009).

Harford, Mansi, and Maxwell (2008) focus on the spending hypothesis: self-interested incumbents prefer firm expansion and thus spend excess cash flows when this cash resource becomes available (Jensen and Meckling, 1976). When incumbents hoard excess cash stockpiles, these incumbents often tend to quickly use up cash reserves in capital expenditures or mergers and acquisitions. Harford, Mansi, and Maxwell (2008) assess whether weak corporate governance structures with more G-index or E-index anti-takeover provisions and lower insider equity stakes interact with cash reserves in exacerbating the agency conflict between incumbents and shareholders.

Firms with high G-indices or E-indices have lower stock market values ceteris paribus (Gompers, Ishii, and Metrick, 2003; Bebchuk, Cohen, and Ferrell, 2009). Also, firms with more G-index or E-index anti-takeover provisions experience a deterioration in operating performance in contrast to firms with fewer anti-takeover provisions (Core, Guay, and Rusticus, 2006). Furthermore, high G-index firms often suffer substantial shareholder wealth losses on M&A announcements (Masulis, Wang, and Xie, 2007). Another governance metric is corporate insider stock ownership. High insider ownership may help mitigate the free-rider problem in monitoring management in search of less managerial opportunism (Shleifer and Vishny, 1986). Alternatively, this ownership concentration can act to promote self-interest on the part of corporate incumbents (Shleifer and Vishny, 1997).

Harford, Mansi, and Maxwell (2008) follow Opler, Pinkowitz, Stulz, and Williamson (1999) to include a variety of control variables to isolate the effect of both prior cash and governance metrics on subsequent cash-to-assets. These control variables include firm size, leverage, market-to-book, cash-flow-to-assets, 10-year cash flow volatility, net-working-capital-to-assets, R&D-to-sales, capital-expenditure-to-assets, M&A-expenditure-to-assets, dividend payout, and bond rating availability. Harford, Mansi, and Maxwell (2008) report that cash resources are positively related to the quality of corporate governance: firms with better governance hoard relatively more cash (conversely, firms with weaker governance hoard relatively less cash). Specifically, cash reserves are negatively related to the G-index that measures the number of anti-takeover provisions for a given firm. In addition, cash reserves are positively related to insider equity stakes that serve as another proxy for the severity of agency conflicts between managers and shareholders. These empirical results are robust to a variety of alternative specifications with different control variables.

Harford, Mansi, and Maxwell (2008) report evidence in support of the spending hypothesis: firms with better corporate governance tend to spend excess cash on M&A, capital investment, and dividend payout. The interaction between high G-indices and cash reserves suggests that this propensity to increase M&A and capital investment is greater in the presence of excess cash (Harford, 1999; Masulis, Wang, and Xie, 2007). Firms with more excess cash increase their dividend distributions and so commit to higher payouts in the long run. In contrast, firms with weak governance choose to repurchase stock with no commitment to maintaining future dividend streams. Harford, Mansi, and Maxwell’s (2008) empirical study serves as an ingenious resurrection of the agency story of managerial entrenchment and excess cash utilization.

Gao, Harford, and Li (2013) note that there are fundamental differences in the determinants of corporate cash decisions between public and private firms. In comparison to public firms, private firms experience a faster speed of adjustment toward the target cash-to-assets ratio (i.e. it takes about 8 years for the typical private firm to close the wedge between the target cash ratio and the status quo). Relative to public firms, private firms face less severe agency conflict, better investment quality (higher R&D intensity and ROA), and lower leverage. This agency difference helps explain why on average private firms retain about half as much cash as public firms do. In sum, Gao, Harford, and Li’s (2013) empirical results suggest that the agency issue affects not only the relative level of corporate cash retention but also how incumbents react to cash in excess of the target cash-to-assets ratio.

With U.S. fintech patent approval, accreditation, and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors worldwide.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

Corporate cash management - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

Corporate cash management

https://ayafintech.network/blog/corporate-cash-management/
Comment

James Campbell

2025-02-20 02:16:52

Bullish

Quantitative fundamental analysis

Our latest podcast deep-dives into why President Trump continues to blame China for the long prevalent U.S. trade deficits and several other social and economic deficiencies as he moves into his second term.

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This fun podcast is about 10 minutes long (with smart AI podcast generation from Google NotebookLM). https://bit.ly/42ucDKt

In recent years, President Donald Trump blames China for the long prevalent high U.S. trade deficits against the middle kingdom. Now China seems to hollow out the American industrial homeland from smartphones and semiconductor microchips to electric vehicles (EV), drones, high-speed broadband networks, cloud services, and even large language models (LLM) for generative artificial intelligence. President Trump further blames China for causing the Covid pandemic crisis worldwide. Also, President Trump accuses China of attacking the U.S. and its western allies with fentanyl in the current opioid crisis. Given his U.S. domestic economic protectionism, President Trump seeks to double down on the hardline trade war with China. Specifically, President Trump seeks to impose hefty tariffs, export restrictions, and indefinite bans on many foreign investment categories against China. As President Trump moves into his second term, he continues to view China as a geopolitical adversary in a zero-sum game. In order to make America great again, many supporters seem to think only President Trump and his hardcore cabinet members can come up with hardline economic policies, sanctions, and regulations to tame the respective foes and rivals in Beijing. Political tensions between the U.S. and China continue to persist and even exacerbate in recent years. As a result, the bilateral relations between the U.S. and China seem to rest on flimsy foundations. Nowadays, geopolitical alignment often reshapes and reinforces asset market fragmentation in the wider context of financial deglobalization. Around the world, several western governments seek to incorporate new elements of global resilience into economic statecraft.

In China, President Xi Jinping and his cabinet members may not view the new Trump second term with fear and trepidation. These Chinese leaders, technocrats, and diplomats already learned much from the Trump first term, the Biden administration, and the populist return of Donald Trump to the White House in recent years. President Trump tends to apply economic protectionism across many industrial sectors and categories with fresh geopolitical tensions and frictions on the global stage. Early in his second term, President Trump declares retreats from the international Paris climate agreement, Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and even the World Health Organization (WHO). In effect, these complete withdrawals highlight the fact that the new Trump administration tends to undertake unilateral measures in support of greater economic protectionism in America. Despite the growing trade tensions, disputes, and frictions between Beijing and Washington, the Xi administration still seeks to navigate new confrontations in global trade, finance, and technology. Also, the new Trump administration may impose new tariffs and other economic sanctions on Canada, Mexico, and some other western allies. This hardline approach would encourage many countries, such as France, Germany, Japan, and Australia, to hedge their foreign investment bets outside North America. Specifically, these countries may choose to build better ties with Beijing, partly through its Belt-and-Road Initiative, in response to greater economic policy uncertainty in Washington. Although the U.S. and China may inadvertently stumble into the proverbial Thucydides trap, we believe the best likelihood of military threats between these dual superpowers remains quite low. Over the past decade, President Trump has not shown any deep and extreme ideological inclinations. It does not seem likely for the current competition between the U.S. and China to further escalate into a more destructive New Cold War. Although President Trump sees more realism in the current balance of power between the U.S. and China, he strives to stop-and-prevent wars in the hot and lofty pursuit of world peace. In recent years, President Trump has reiterated his intentions to coordinate truces, ceasefires, and peaceful resolutions of the relentless Russia-Ukraine war in Eastern Europe, as well as the current conflicts between Israel and Iran, Lebanon, Hamas, and the Palestinians in the Middle East. The new Trump administration seeks to better contain China, its recent rise on the global stage of economic growth, and endless interference over Taiwan along the Pacific first island chain.

Beijing believes Trump’s presidential election victory has little or minimal influence over the near-term trajectory of U.S. foreign policies toward China. In U.S. Congress, the bipartisan consensus perceives China as a unique series of new economic, technological, military, and diplomatic threats to the U.S. and its western allies, regardless of who wins the presidential bid to enter the White House. To the extent that the U.S. seeks to further contain-and-derisk from China, Russia, Iran, and North Korea, geopolitical alignment reshapes and reinforces asset market fragmentation in the broader context of financial deglobalization. Through U.S. political history, not everything remains the same from one administration to another. During his second term, President Trump is likely to maintain the hardline approach to foreign affairs with China not only from his own first term, but also from the Biden administration. President Trump seems to have learned from his first term that the current hardline approach to China would need to refresh with new and much younger cabinet members, such as Secretary of State Marco Rubio and Secretary of Defense Peter Hegseth, both of whom serve as China hawks with strong anti-communist beliefs. The devil is in the details. President Trump needs more nuance in the new bilateral relations between the U.S. and China. This nuance directs President Trump’s nominations for foreign policy and national security positions away from right-wing extremists (who served in their rightful capacity in the first Trump administration). In support of calm and stable asset markets, President Trump picks new cabinet members as strategic partners who can help advise on a wide range of global economic, technological, military, and diplomatic themes and issues during the recent rise of China, Russia, Iran, and North Korea on the global stage. Many of the new cabinet members continue to view China as the primary threat to the U.S. with substantial economic and technological advancements. For this reason, these cabinet members tend to favor new hardline and coercive measures for the new Trump administration to constrain China’s sphere of influence. Unlike the former Soviet Union in the Cold War era, China retains virtually no or few global ambitions to expand its communist propaganda. Nonetheless, the Trump administration needs to remain careful and cautious toward China’s increasingly aggressive policy stances toward Taiwan, Japan, Hong Kong, South Korea, and other strategic partners in East Asia.

In the wider geopolitical context, the same hardline approach may not work well because so much has changed significantly since the first Trump administration. When President Trump entered the White House for the first time in early-2017, many governments thought Trump would serve like a conventional American leader, an ideologically neutral businessman, and an economically rational decision-maker. Indeed, many major western allies thought Trump would commit to their common prosperity and regional security worldwide. President Trump visited China, Vietnam, South Korea, and the Philippines in November 2017. Despite U.S. opposition to Russia’s annexation of Crimea from Ukraine back in 2014, the Kremlin invited President Trump to Moscow for Russia’s annual celebration of the victory in World War II in late-2017. Subsequently, President Trump met with Russian President Vladimir Putin in a summit in Helsinki, Finland, as part of a weeklong trip to Europe in July 2018.

This time may be a bit different. Many leaders and governments are now proactive to protect their own countries from substantial economic policy uncertainty in Washington as President Trump moves into his second term. French President Emmanuel Macron invited President Trump to visit Paris as Macron would like to indicate that Europeans are their own decision-makers with respect to their own common prosperity, security, and climate risk management. Also, Japan and Germany reiterate their current concern that President Trump may require bigger fractions of their respective fiscal budgets to guarantee American military protection in their countries. In South Korea, the interim government worries that President Trump may take advantage of its current lack of authority over domestic affairs to the detriment of many special interest groups. In Taiwan, the extant government further fears that President Trump may tap into more than 5% of its annual economic output in return for U.S. military presence in response to China’s constant aggression.

In Eastern Europe, President Trump needs to grapple with the fact that Russia continues to attack Ukraine even though the U.S. and its western allies provide military support to Kiev. In the Middle East, Washington continues to provide military aid and geopolitical support for Israel’s brutal and bloody operations in Gaza, where many mainstream pundits believe there is an ongoing humanitarian crisis. Specifically, this crisis has further exposed the hypocrisy of U.S. claims to champion international law, world peace, and human rights. In his second term, President Trump has to better coordinate truces, ceasefires, and peaceful resolutions of these regional wars and conflicts in the lofty pursuit of world peace. Indeed, these peaceful resolutions can be a good legacy for President Trump to leave behind in his second term.

Since the first Trump administration, Beijing has become more adept at managing its current competition with Washington. We can trace this competition to the Obama administration in 2010 when President Obama embarked on a strategic pivot to Asia. In the subsequent years, Beijing has successfully navigated the different foreign-policy strategies and paradigms of the Obama, Trump, and Biden administrations. Both Biden and Obama attempted to contain China through multilateral negotiations, engagements, and approaches, while Trump took a more unilateral foreign policy stance toward China. With a decade-long experience, Chinese leaders remain calm, careful, and cautious toward the same well-known prospect of a Trump second term. On some of its official government agency websites, Beijing has even released strategic guidelines on how their leaders, technocrats, and diplomats can handle President Trump’s harsh foreign-policy measures against China. The Xi administration adheres to the current commitment to mutual respect, peaceful co-existence, and win-win cooperation as the mainstream principles for China-U.S. relations in trade, finance, and technology. Mutual respect refers to the worst-case scenario where China may retaliate by offloading more than $750 billion massive stockpiles of U.S. government bonds against any provocative foreign-policy measures, export restrictions, tariffs, quotas, embargoes, and several other economic sanctions that the new Trump administration chooses to undertake against China. Peaceful co-existence reflects the fact that China seeks to engage President Trump and his reps in new mutual dialogues to better manage expectations, differences, and even conflicts. In this fashion, the ultimate peaceful resolutions would help stabilize China-U.S. relations. Win-win cooperation refers to joint collaboration on global themes and issues in which China and the U.S. share common interests. In the meantime, these global themes and issues include the peaceful resolutions of wars and conflicts in Eastern Europe and the Middle East, as well as bilateral rules and regulations for artificial intelligence infrastructure, semiconductor micro-chip design, and the worldwide flow of illicit drugs (specifically, fentanyl and ketamine).

President Trump seems intent on further entrenching U.S. domestic economic protectionism in his second term, especially when this hardline foreign policy stance involves bilateral trade with China. President Trump has indicated that he might levy higher tariffs on Chinese goods. Also, the Trump administration seeks to impose more draconian restrictions on U.S. foreign direct investments (FDI) in China as well as on Chinese capital in the U.S. stock market. In addition, the Trump administration plans to place more constraints on China-U.S. high-tech collaboration with substantially fewer Chinese students and H1-B workers in the U.S. across STEM subjects. These decisions may inadvertently result in greater frictions between Beijing and Washington. Although the Biden administration extended the tariffs that Trump imposed on Chinese goods in his first term, this extension focused on excluding China from the global supply chains for intermediate technological goods, such as semiconductor microchips and high-speed broadband networks etc. Specifically, the Biden administration sought to de-risk from China, but did not seek to completely decouple from China. Throughout Biden’s tenure, key traditional trade sectors between China and America continued business-as-usual even though their technological collaboration came to a halt. In his second term, President Trump is likely to push harder for further decoupling from China. His new industrial homeland policy stance toward China may dramatically reduce the total market share of Chinese products in America. This reduction spans intermediate goods made and built outside China; however, their lean production still relies heavily on Chinese investments, factories, components, and other industrial resources. At the same time, Beijing may retaliate by offloading at least some of the $750 billion massive stockpiles of U.S. government bonds, as well as $2 trillion dollar assets, against any provocative foreign-policy measures, export restrictions, tariffs, quotas, embargoes, and some other economic sanctions that the new Trump administration deploys against China. This tit-for-tac dynamism may drive the China-U.S. trade war to a new peak. As a consequence, the global economy would suffer with new scars and damages as many other countries scramble to implement their own protectionist policies in global trade, finance, and technology.

We build, design, and delve into our new and non-obvious proprietary algorithmic system for smart asset return prediction and fintech network platform automation. Unlike our fintech rivals and competitors who chose to keep their proprietary algorithms in a black box, we open the black box by providing the free and complete disclosure of our U.S. fintech patent publication. In this rare unique fashion, we help stock market investors ferret out informative alpha stock signals in order to enrich their own stock market investment portfolios. With no need to crunch data over an extensive period of time, our freemium members pick and choose their own alpha stock signals for profitable investment opportunities in the U.S. stock market.

With U.S. patent accreditation and protection for 20 years, our AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

Smart investors can consult our proprietary alpha stock signals to ferret out rare opportunities for transient stock market undervaluation. Our analytic reports help many stock market investors better understand global macro trends in trade, finance, technology, and so forth. Most investors can combine our proprietary alpha stock signals with broader and deeper macrofinancial knowledge to win in the stock market.

Through our proprietary alpha stock signals and personal finance tools, we can help stock market investors achieve their near-term and longer-term financial goals. High-quality stock market investment decisions can help investors attain the near-term goals of buying a smartphone, a car, a house, good health care, and many more. Also, these high-quality stock market investment decisions can further help investors attain the longer-term goals of saving for travel, passive income, retirement, self-employment, and college education for children. Our AYA fintech network platform empowers stock market investors through better social integration, education, and technology.

President Donald Trump blames China for the long prevalent U.S. trade deficits and several other social and economic deficiencies. - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

President Donald Trump blames China for the long prevalent U.S. trade deficits and several other soc...

https://ayafintech.network/blog/president-trump-blames-china-for-the-long-prevalent-us-trade-deficits-and-other-social-and-economic-woes/
Comment

John Fourier

2024-02-21 06:46:35

Bullish

Quantitative fundamental analysis

Andy Yeh Alpha (AYA) fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors. Our AYA fintech network platform serves as a new online social community for long-term stock market investors (who should time the market more aggressively with healthy cash dividends and capital gains than myopic short-run traders). Specifically, the main platform features include AYA-exclusive proprietary alpha stock signals, CAPM alphas, Fama-French alphas, real-time stock prices, historical returns, interactive charts, social media messages, value and momentum portfolio strategies, analytic reports, blog articles, ebooks, and many other personal finance tools for stock market investors and traders both in America and around the world.

As of early-January 2023, the U.S. Patent and Trademark Office (USPTO) has approved our U.S. fintech patent application: Algorithmic system for dynamic conditional asset return prediction and fintech network platform automation. On 4 March 2021, we filed a U.S. patent continuation application (Application Number: #17192059; Publication Number: US20210192628) with a new set of claims in accordance with the April 2017 initial application (Application Number: #15480765; Publication Number: US20180293656). We went through many USPTO office actions, rejections, failures, setbacks, and other technical obstacles. Eventually our fintech patent efforts came to fruition in time. We paid the USPTO maintenance fees to secure our patent protection and accreditation for 20 years.

AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors. The latest platform update includes new product features such as the personal stock investment vitae, free access to our online social community for stock market posts and discussions, virtual stock market game with real-time stock prices, several leaderboards for our virtual investors, and a rich library of ebooks, analytic reports, research articles, and many more.

Each freemium member trades top 6,000+ U.S. stocks, equity market funds, and ADRs with $1 million virtual token talents, updates his or her personal stock investment vitae with the most profitable stock positions, and pays some small annual fee to access our premium electronic resources (specifically, AYA-exclusive ebooks on the current macroeconomic and technological trends in smart-beta stock market investment and portfolio optimization).

Our homepage now offers a free stock search tool for the top tech titans Meta, Apple, Microsoft, Google, and Amazon (MAMGA). The premium membership classes offer all kinds of features and benefits such as top 6,000+ U.S. proprietary alpha stock signals, ebooks, analytic reports, and research articles, and other personal finance tools etc. Our AYA fintech network platform freemium pricing plan differentiates various online product features and benefits.

Each alpha stock signal represents an excess return to a smart-beta stock investment portfolio strategy. For instance, a 15% alpha suggests that we would predict the excess return to be about 15% per annum relative to the smart-beta market portfolio for a given stock with zero beta exposure to the 6 Fama-French fundamental factors such as size, value, momentum, asset growth, operating profitability, and market risk. Each prospective premium member can make his or her credit card payment via the secure PayPal payment gateway. AYA fintech network platform uses the safe and secure online payment gateway through PayPal (the biggest online fund transfer platform in USA with 83%+ online market penetration).

With USPTO fintech patent protection and accreditation since early-January 2023, our proprietary alpha investment model consistently outperforms the major stock market benchmarks such as S&P 500, Dow Jones, Nasdaq, and MSCI USA, MSCI Europe, MSCI Asia, and MSCI World. We implement our proprietary alpha investment model for positive hefty U.S. stock signals. We track the stock prices and returns for the recent multi-year period from early-February 2017 to present. This data span allows us to conduct an out-of-sample test to assess our proprietary alpha investment model performance in comparison to the major stock market benchmarks.

In the long run, S&P 500 yields a 12% net overall return per annum (NORPA), and Dow Jones and Nasdaq generate 12% to 17% NORPAs. In the same time frame, MSCI stock market benchmarks deliver 5% to 13% NORPAs (MSCI USA, MSCI World, MSCI Europe, and MSCI Asia). With our proprietary alpha investment model, all of our virtual stock market portfolios outperform these major stock market benchmarks with 18% to 21% NORPAs. In practice, all of the 17 virtual stock portfolios deliver higher NORPAs than Dow Jones, Nasdaq, S&P 500, and MSCI stock market index returns over the long run.

For most market indexes and benchmark portfolios (such as S&P 500, Nasdaq, Dow Jones, MSCI World, MSCI USA, MSCI Europe, and MSCI Asia), the signal-to-noise ratio, or Sharpe ratio of average asset return to standard deviation, is 0.35 to 0.55 with 10% average returns and 18% to 30% standard deviations. The vast majority of static Fama-French asset return models produce maximum Sharpe ratios in the range of 0.65 to 0.75; whereas, our algorithmic alpha investment system produces the Sharpe ratio of at least 1.675 with 20% to 30% average returns and 12% to 16% standard deviations. Our US fintech patent specification provides more technical details on both the competitive advantages and distinctive capabilities of our algorithmic cloud system for dynamic conditional asset return prediction and fintech network platform automation. The recent double-digits model performance corroborates the scientific fact that our proprietary alpha investment model outperforms the major stock market benchmarks.

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Andy Yeh Alpha (AYA) fintech network platform: major milestones, key product features, and online social media services - Blog - AYA fintech network platform provides proprietary alpha stock signals and personal finance tools for stock market investors.

This page describes the major milestones, key product features, and online social media services ava...

https://ayafintech.network/blog/ayafintech-network-platform-seo-transformation-notification/
Comment

Jonah Whanau

2022-04-08 12:24:25

Bullish

Quantitative fundamental analysis

Thomas Philippon presents both empirical facts and policy implications to highlight the different aspects of the recent rise of market power in America. Product market concentration has increased in America but not in Europe. A lack of product market competition can often result in a pervasive decline in capital investment, a decline in technological innovation, and a broad slowdown in wage growth. The recent rise of market power in America, and the different outcome in Europe, are due to policy choices with respect to antitrust merger review by the Department of Justice (DOJ) and the Federal Trade Commission (FTC). In this view, Philippon focuses on the adverse impact of market power on capital investment and productivity growth in America. The macroeconomic policy implications include the pervasive decline in high-skill labor productivity and the negative effects of less intense product market competition on wage growth and inequality.

One question is how most inadequate policy choices with respect to merger review and antitrust enforcement appear to tilt market power. A different question is how technological change bolsters market power in the current antitrust policy regime. A lot of evidence helps support the technological change hypothesis in addition to lax antitrust enforcement. U.S. merger review and antitrust policy choices tend to serve as the dominant explanation for the recent rise of market power in America. In this fundamental view, America seems quite different from Europe in terms of a lack of antitrust scrutiny.

$WMT $CVX $PFE $PG $BABA $MA $ORCL $ASML $TSLA $NVDA $IBM $INTC $BAC $WFC $JPM $TSM 

#size #value #momentum #profitability #assetgrowth #marketrisk #fibonacci #macd #returnvariance #industry 

The great reversal of antitrust merger review in America - Blog - AYA fintech network platform for stock market investors

The great reversal of antitrust merger review in America

https://ayafintech.network/blog/the-great-reversal-of-antitrust-merger-review-in-america/
Comment
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