Price Pressure: Evidence from the “Dartboard” Column

The author investigates whether analysts' recommendations in the 'Dartboard' column of the Wall Street Journal have an impact on stock prices and whether this impact is temporary or long-lived. He documents a significant two-day announcement effect that is reversed within fifteen days. This announcement effect is intertwined with the pros' track record. The author's study supports the price pressure hypothesis: abnormal returns and trading volumes around the announcement day are mainly driven by noise trading from naive investors. On average, investors following the experts' recommendations lose 3.8 percent on a risk-adjusted basis over a six-month holding period.