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Do Agricultural Market Advisory Services Beat The Market? Evidence From The Wheat Market Over 1995-1998

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  • Jirik, Mark A.
  • Irwin, Scott H.
  • Good, Darrel L.
  • Martines-Filho, Joao
  • Jackson, Thomas E.

Abstract

The purpose of this report is to address two basic performance questions for market advisory services in wheat: 1) Do market advisory services, on average, outperform an appropriate market benchmark? and 2) Do market advisory services exhibit persistence in their performance from year-to-year? Data on wheat net price received for advisory services, as reported by the AgMAS Project, are available for the 1995, 1996, 1997 and 1998 crop years. Not only do market advisory programs in wheat consistently fail to "beat the market," their performance is significantly worse than the market. On average, market advisory service performance is about $14 per acre below benchmark revenue, an economically non-trivial amount by any reasonable standard. The predictability results provide little evidence that future advisory service pricing performance can be predicted from past performance.

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Bibliographic Info

Paper provided by University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics in its series AgMAS Project Research Reports with number 14778.

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Date of creation: 2001
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Handle: RePEc:ags:uiucrr:14778

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Keywords: Marketing;

References

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  1. Ritter, Jay R, 1991. " The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(1), pages 3-27, March.
  2. Jennifer Carpenter & Anthony Lynch, 1998. "Survivorship Bias and Attrition Effects in Measures of Performance Persistence," New York University, Leonard N. Stern School Finance Department Working Paper Seires 98-077, New York University, Leonard N. Stern School of Business-.
  3. Andrew Metrick, 1998. "Performance Evaluation with Transactions Data: The Stock Selection of Investment Newsletters," NBER Working Papers 6648, National Bureau of Economic Research, Inc.
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  5. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
  6. Grossman, Sanford J & Stiglitz, Joseph E, 1980. "On the Impossibility of Informationally Efficient Markets," American Economic Review, American Economic Association, vol. 70(3), pages 393-408, June.
  7. Elton, Edwin J & Gruber, Martin J & Rentzler, Joel C, 1987. "Professionally Managed, Publicly Traded Commodity Funds," The Journal of Business, University of Chicago Press, vol. 60(2), pages 175-99, April.
  8. Schroeder, Ted C. & Parcell, Joseph L. & Kastens, Terry L. & Dhuyvetter, Kevin C., 1998. "Perceptions Of Marketing Strategies: Producers Versus Extension Economists," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 23(01), July.
  9. Kastens, Terry L. & Schroeder, Ted C., 1996. "Efficiency Tests Of July Kansas City Wheat Futures," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(02), December.
  10. Good, Darrel L. & Irwin, Scott H. & Jackson, Thomas E., 1998. "Development Of A Market Benchmark Price For Agmas Performance Evaluations," AgMAS Project Research Reports 14783, University of Illinois at Urbana-Champaign, Department of Agricultural and Consumer Economics.
  11. Carl R. Zulauf & Scott H. Irwin, 1997. "Market Efficiency and Marketing to Enhance Income of Crop Producers," Finance 9711004, EconWPA.
  12. George F. Patrick & Stanton Ullerich, 1996. "Information sources and risk attitudes of large-scale farmers, farm managers, and agricultural bankers," Agribusiness, John Wiley & Sons, Ltd., vol. 12(5), pages 461-471.
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Cited by:
  1. Brorsen, B. Wade & Anderson, Kim B., 2002. "Actual Farmer Market Timing," 2002 Conference, April 22-23, 2002, St. Louis, Missouri 19065, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.

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