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| Author: | Boyle, G.W. Guthrie, G.A. |
| Title: | Human capital and popular investment advice |
| Journal: | Review of finance
2005 : VOL 9:2, p. 139-164 |
| Index terms: | Stock markets Investment Human capital Models Australia Japan Canada Europe USA |
| Language: | eng |
| Abstract: | Stock/bond and stock/wealth ratios should rise with investor risk tolerance and investment horizon according to popular investment advice. This study shows that extending the mean-variance model to include human capital, without any other modifications, can simultaneously justify both recommendations, as long as the correlation btw. labour income and stock returns falls within a range determined by market and investor-specific parameters. This requirement is generally satisfied by aggregate labour income data from 11 countries. |
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