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The Risk Premium Factor: A New Model for Understanding the Volatile Forces that Drive Stock Prices by Stephen D. Hassett

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Notes

PREFACE

1. Eugene F. Fama and Kenneth R. French, “Luck versus Skill in the Cross Section of Mutual Fund Returns,” Journal of Finance 65(5) (October 2010).

2. Standard & Poor’s, Index and Portfolio Services, “Do Past Mutual Fund Winners Repeat? The S&P Persistence Scorecard,” January 27, 2010. Available at SSRN: http://ssrn.com/abstract=1543364.

3. Stephen D. Hassett, “The RFP Model for Calculating the Equity Market Risk Premium and Explaining the Value of the S&P with Two Variables,” Journal of Applied Corporate Finance 22(2) (Spring 2010): 118–130.

4. Justin Fox, The Myth of the Rational Market: History of Risk, Reward and Delusion on Wall Street (New York: Harper Collins, 2009), 199.

5. Daniel Kahneman and Amos Tversky, “Advances in Prospect Theory: Cumulative Representation of Uncertainty.” Journal of Risk and Uncertainty 5 (1992): 297–323.

6. If this seems confusing, assume you have $100. If you choose to flip a coin, you end up with your original $100 plus your winnings, for a total of $325. If you lose, you have $0. If you don't flip, you are guaranteed to keep your $100.

CHAPTER 1

1. Paul Krugman, “Dow 36,000: How Silly Is It?,” official Web page of Paul Krugman. November 2010 (http://web.mit.edu/krugman/www/dow36K.html).

2. Franco Modigliani and Merton H. Miller, “Dividend Policy, Growth, and the Valuation of Shares.” Journal of Business 34(4) (1961); “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 1985,” Nobelprize.org, November 16, 2010, ...

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