RETURNS TO INVESTORS IN STOCKS IN NEW INDUSTRIES |
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| Authors: | CORA BARNHART GERALD P. DWYER |
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| Affiliation: | Barnhart: Associate Professor, School of Business, Palm Beach Atlantic University, West Palm Beach, FL 33401. Phone 561‐803‐2484, Fax 561‐803‐2455, E‐mail cora_barnhart@pba.edu |
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| Abstract: | We examine investors' returns from publicly traded stock in new industries associated with major changes in transportation and communication in the United States. Return distributions during the development of own‐brand personal computers, airlines, airplane and automobile manufacturers, railroads, and telegraphs reveal three general characteristics. A few companies generate outstanding returns, many firms fail, and returns are volatile. Firms' expected returns are higher than market returns for three of the five industries. Sharpe ratios and Jensen's alphas for portfolios of each new industry indicate that portfolios of stocks in firms in new industries are not an obvious bad deal. (JEL G1, G12, N2, N21, N22) |
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