How Much Business Investment Is the Right Amount?

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Andrew Lapthorne, a quantitative strategist at Societe Generale SA, recently looked at the correlation between business investment and individual stock prices, in a report titled “How does too much or too little investment affect a company’s stock price?”.

Some of their results were surprising: Stocks of companies that over- or underinvest get punished in Europe and North America. However, in Japan, firms don’t seem to suffer as much for the consequences of their investments.

 

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