Media releases

• Brock researcher examines how stocks react to economic news

  Friday, April 29, 2016 | By Brock University

  MEDIA RELEASE: R00095 – 29 April 2016

  New research from a Brock University economist contradicts conventional wisdom when it comes to the stock market’s reaction to economic news.

  The common belief suggesting stock markets do better when the economy is doing well is countered by Ivan Medovikov, assistant professor in Brock’s Department of Economics. The reality, according his research, published this month by the Journal of Banking & Finance, is that only when economic news holds doom and gloom, does the market really listen.

  “Unusually bad macroeconomic news tends to lead to substantial market declines, while equally unusually good news has little market effect,” explains Medovikov in his paper. He says stocks seem to ignore good news about the economy, but the arrival of bad news has a strong and negative effect.

  Can we profit from pessimism? Yes, according to Medovikov. If we pay attention to the news and act quickly, the study suggests that by selling stocks short in the wake of bad announcements, one can beat the market by as much as nine per cent per year.

  If you don’t believe him, you can try it yourself. For his research, Medovikov developed a new, comprehensive measure of economic news called the Macroeconomic News Index, a tool now available to the public at www.macronewsindex.net

  He began by classifying and indexing news stories focused on items in five key categories of economic conditions. He used only the news wires carried by Thomson Reuters and the Dow Jones Energy Service, two of the leading providers of business and economic information.

  After collecting relevant news releases and categorizing them as positive, negative or neutral, Medovikov built a model of association between economic news and the stock market using statistical theory of copulas. His results show that publicly available information can be used to increase profits, an idea that contradicts our current view of how the stock market operates.

  Medovikov’s research was funded in part by the Council for Research in the Social Sciences (CRISS) at Brock University, which advances research and scholarship through the administration of small research grants awarded to faculty members through a peer-reviewed, transparent process adjudicated by a committee of faculty members. The committee is chaired by Diane Dupont, the Associate Dean, Graduate Studies and Research.

  “I am really excited that CRISS was able to support this line of research that Ivan has begun,” says Dupont. “His work shows how innovative researchers can be when they harness their disciplinary tools to address real-world issues. It has been said that economics is the ‘dismal science.’ In one way, Ivan’s research supports this view, but in another way, he shows a promising new avenue that investors might consider adding to their decision-making tools to assist them in dealing with potentially adverse outcomes.”

  Assistant Professor Ivan Medovikov is available for media requests.

  For more information or for assistance arranging interviews:
  * Dan Dakin, Media Relations Officer, Brock University ddakin@brocku.ca,
  905-688-5550 x5353 or 905-347-1970

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  Categories: Media releases

• Brock researchers to study how parents rate their kids’ memory

  Thursday, April 28, 2016 | By Brock University

  MEDIA RELEASE: R00094 – 28 April 2016
  Brock University — Communications & Public Affairs
   

  How accurate are you in being able to estimate your child’s ability to plan for the future?

  It’s a question Brock University assistant psychology professor Caitlin Mahy and master student Tessa Mazachowsky are aiming to find out.

  The two are researching the development of children’s abilities to think, plan and remember things for the future.

  Mahy’s earlier research has explored when and how prospective memory develops in children. “Prospective memory” is a process in which we remember to carry out a plan we made earlier, such as going to a friend’s birthday party.

  Now, she and Mazachowsky want to add parental perceptions into the mix.

  “This is the first study to look at children’s future thinking from the parents’ perspective,” says Mahy.

  The duo is seeking approximately 200 parents — mothers, fathers or both ¬— to fill out a questionnaire asking them to rate how well their children perform tasks in five categories of future thinking:
  •    Prospective memory: how well does your child remember to do things in the future?
  •    Planning: how good is your child at making a plan and following through with that plan?
  •    Saving: can they save money in their piggy bank? Do they save a picture to show Grandma later?
  •    Delayed gratification: do they wait for two cookies later, or take the one cookie they are offered now?
  •    Future planning: are they able to imagine themselves in future scenarios and plan accordingly? i.e. can they imagine that they need a tent, blanket, cooking materials, etc. for a camping trip

  Of the 200 parents, the researchers would like at least 80 to bring their children to Brock so the children can perform future thinking, planning and prospective memory tasks.

  “We’re looking to compare the parents’ answers on the questionnaire to the child’s actual behavioural performance on the tasks,” says Mazachowsky.

  Mahy explains that, for those parents choosing just to do the questionnaire, the researchers will focus on the parents’ consistency in answering questions from the five different categories of future thinking.

  Mahy says it’s important for researchers to know if parents correctly gauge their children’s future thinking skills.

  A parent who has an accurate picture of their child’s skills will know if the child might need extra encouragement and support for developing memory and planning skills, says Mahy.

  “Maybe your child is a little bit behind with understanding saving so maybe it’s a good time to start introducing concepts of savings and allowance,” she says. “Or maybe it’s way too early. You give your child a quarter and they’re going to want to spend it immediately; they might not have that ability yet.”

  See more about the research in The Brock News.

  To participate in the research, or for more information, contact: Tessa Mazachowsky, tm10nt@brocku.ca

  Brock University assistant psychology professor Caitlin Mahy is available to speak to media. She can be reached at 905-688-5550 x6151 or caitlin.mahy@brocku.ca

  For more information or for assistance arranging interviews:
  * Dan Dakin, Media Relations Officer, Brock University ddakin@brocku.ca,
  905-688-5550 x5353 or 905-347-1970

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  Categories: Media releases