Financial diversification before modern portfolio theory: UK financial advice documents in the late nineteenth and the beginning of the twentieth century

Abstract

The paper offers textual evidence from a series of financial advice documents in the late nineteenth century and the early twentieth century of how UK investors perceived of and managed risk. In the world's largest financial centre of the time, UK investors were familiar with the concept of correlation and financial advisers’ suggestions were consistent with the recommendations of modern portfolio theory in relation to portfolio selection strategies. From the 1870s, there was an increased awareness of the benefits of financial diversification – primarily putting equal amounts into a number of different securities – with much of the emphasis being on geographical rather than sectoral diversification and some discussion of avoiding highly correlated investments. Investors in the past were not so naïve as mainstream financial discussions suggest today.     

Stock market investors' use of stop losses and the disposition effect

The disposition effect is an investment bias where investors hold stocks at a loss longer than stocks at a gain. This bias is associated with poorer investment performance and exhibited to a greater extent by investors with less experience and less sophistication. A method of managing susceptibility to the bias is through use of stop losses. Using the trading records of UK stock market individual investors from 2006 to 2009, this paper shows that stop losses used as part of investment decisions are an effective tool for inoculating against the disposition effect. We also show that investors who use stop losses have less experience and that, when not using stop losses, these investors are more reluctant to realise losses than other investors.     

Sensory evaluation and physico‐chemical measurements of tomatoes commonly consumed in New Zealand

Five different locally sourced commercially grown tomatoes (cultivars; Aranca, Excell, Flavourine, Mondeo and Solairo) and one grown in Australia (Gourmet) were subjected to sensory evaluation using a consumer taste panel. Physico‐chemical characteristics (CIE colour, dry matter, °Brix, titratable acidity, pH and °Brix : acid ratio) were also measured on the tomatoes. Overall, the sensory evaluation results showed that there were differences between the tomato cultivar most likely to be purchased (Excell, bright red skin colour) and the tomato liked most overall (Aranca, darker red skin colour). Panellists gave a wide range of juiciness and hardness scores to the tomatoes evaluated. Cultivars Flavourine, Aranca and Solairo were moderately sweet while Excell, Mondeo and Gourmet were regarded as not sweet at all. Physico‐chemical results showed that the New Zealand grown tomato varieties evaluated were comparable with other tomatoes grown in New Zealand while most tomatoes were redder and had higher titratable acidity compared with studies of tomato varieties from other countries. The panellists initially ranked the tomatoes on the redness of skin colour but changed their rankings when they had assessed their taste and texture.     

Enterprise Education: The Role of Head Teachers

In the UK there have been recent policy developments in enterprise education, following the Davies Report (2002). In Scotland there has been the launch of a comprehensive enterprise education programme, the Determined to Succeed Strategy (Scottish Executive, 2003) for all schools in Scotland. This Strategy represented the Executive’s response to a working party review of education and enterprise. The review, Determined to Succeed, 2002 represented a comprehensive overview of requirements in order to provide enterprise education in all schools in Scotland. The aim stated is to “take an innovative and experimental approach in developing key themes in the initiative around the professional development of teachers, the engagement of disengaged school students and the promotion of a focused and resource-intensive approach to Enterprise in Education” (Scottish Executive, 2004). This paper reviews developments in enterprise education and the role of Head Teachers and Deputy Head Teachers (school principals and vice-principals). It reports the findings from research conducted with a Leadership Academy, delivered by the Columba 1400 organisation, with Head and Deputy Head Teachers for the Scottish Executive and assesses their critical role in enterprise education.     

Individual investors and social ownership structures in the UK before the 1930s: Joint holdings and trustee investment

After the introduction of limited liability, a growing number of individuals in Britain from a widening social spectrum, including the less affluent, began to own stocks and shares. Drawing upon a unique and large dataset of 35 848 investors between 1870 and 1935, this study analyses joint holdings which have been a neglected aspect of investor behaviour. Our findings reveal that joint holdings were quite common and that about one in five UK investors were involved in a joint investment. Men were more likely to be joint holders than women for reasons related to institutions of social ownership such as trusts and executorships.