When to sell a stock?

A study by Arizona State University finance Professor Crocker Liu & New York University finance Professor David Yermack has found that the bigger the CEO's home is, the worse the company's stock fares. They studied the stock performance of Standard & Poor's 500-stock index firms following home purchases by chief executives.

Investors who short shares of companies after the CEO has moved into a palatial home would reap returns of 29% after one year, and 46% after two years, the study estimates. The authors calculated hypothetical gains based on short sales, a trading strategy in which shares are borrowed and sold in hopes of replacing borrowed shares later at a lower price.

The paper is @ http://papers.ssrn.com/sol3/papers.cfm?abstract_id=970413

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