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The Long-Term Risks of Global Stock Markets

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Author Info
Philippe Jorion

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Abstract

This research investigates the persistence of investment risk across time horizon, a crucial issue in asset allocation decisions. Previous empirical results have focused mainly on US data and suffer from limited sample size in the analysis of long-horizon returns. Investigation of a longterm sample of thirty countries provides additional empirical evidence. The results are not reassuring. There is no evidence of long-term mean reversion in the expanded data sample. Downside risk is not reduced as the horizon lengthens. On the positive side, a globally diversified portfolio would have displayed much less downside risk than any single market.

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Publisher Info
Article provided by Financial Management Association in its journal Financial Management.

Volume (Year): 32 (2003)
Issue (Month): 4 (Winter)
Pages:
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Handle: RePEc:fma:fmanag:jorion03

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  1. Fernandez, Pablo & Bermejo, Vicente J., 2008. "Las empresas españolas en 2007 (y en el periodo 1993-2007). Rentabilidad y creación de valor," IESE Research Papers D/732, IESE Business School. [Downloadable!]
  2. Brunner, Gregory & Hinz, Richard & Rocha, Roberto, 2008. "Risk-based supervision of pension funds : a review of international experience and preliminary assessment of the first outcomes," Policy Research Working Paper Series 4491, The World Bank. [Downloadable!]
  3. Peter Vlaar, 2005. "Defined Benefit Pension Plans and Regulation," DNB Working Papers 063, Netherlands Central Bank, Research Department. [Downloadable!]
  4. Fernandez, Pablo & Carabias, Jose M., 2007. "Rentabilidad y creación de valor para los accionistas de las empresas españolas y del IBEX 35. 1993-2006," IESE Research Papers D/673, IESE Business School. [Downloadable!]
    Other versions:
  5. Fernandez, Pablo & Bermejo, Vicente J., 2008. "IBEX 35: 1992-2007 - Rentabilidad y creación de valor," IESE Research Papers D/725, IESE Business School. [Downloadable!]
    Other versions:
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This page was last updated on 2009-12-10.


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