What Makes Uninformed�Traders Tick?

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Discussant:

Boone Bowles

Texas A&M University

Mays Business School

October 25, 2019

Barbara Bliss, University of San Diego

Mitch Warachka, Chapman University

Marc Weidenmier, Chapman University

Big Question� � � Are prices more or less efficient when information is more widely disseminated?

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Are prices more or less efficient when more uninformed investors participate?

Main Question of this Paper� � Do firms located in states with increasing ticker subscriptions also see an increase in their stock’s price efficiency?

Answer� � Firms in states with increasing ticker subscriptions experience a decrease in price efficiency.

Table 3 – Return continuation increases with ticker subscriptions.

Setting the Stage

• Ticker subscriptions as an example of disseminating information.
• Could be thought of as making investing more accessible to the lay person.

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• Are there similarities to our day?
• Robinhood
• Zero-Commission Trades

Setting the Stage

• Why increases, decreases, spikes?
• New technology? Lower costs?
• How many in 1927, 1950, 1981?
• How many in NYC? How many in College Station, Texas?

Setting the Stage

Main Result and Suggestions

• “A one standard deviation increase in ticker subscription growth results in the subsequent week’s return being 0.036 x 0.26 x R instead of -0.0534 x R. This weekly return difference of 0.0628 x R.”
• Shouldn’t this be 0.044 x R?

Main Result and Suggestions

• Return continuation increases with increased ticker subscriptions; price efficiency declines…
• …but couldn’t we also state that more ticker subscriptions reduce reverals; price efficiency improves?

Main Result and Suggestions

Additional Comments

Overall

• Very interesting paper.

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• Very interesting use of historical information.

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• Very relevant paper with relevant implications.

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• Consider expanding pitch a bit, providing more detail on what explains ticker subscriptions, and use other measure of price efficiency.