Three Morningstar researchers, along with Yale’s Roger Ibbotson, have penned what may safely be called this company’s most ambitious article. All right--book.
The central tenet of the Popularity Asset Pricing Model, or PAPM, as the authors call their creation, is that risk doesn’t fully explain stock market behavior. With some modest exceptions, previous models presume that higher return comes from assuming greater peril. Not so, argue PAPM's authors. Securities come with various attributes, many of which are preferences rather than sources of additional risk.
John Rekenthaler has a position in the following securities mentioned above: BRK.B MORN. Find out about Morningstar's editorial policies.