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From the editor

Can an individual succeed in timing the market? There has been a significant amount of
interest by both academicians and practitioners in the subject of using trading rules to earn
an abnormal return. The first article in this issue by Richard Chung and Lawrence Kryza-
nowski is entitled, “Market Timing Using Strategists’ and Analysts’ Forecasts of S&P 500
Earnings Per Share”. They provide an excellent review of the literature on market timing and
test the usefulness of earnings forecasts as trading rules.

Anthony L. Loviscek and W. John Jordan’s article, “Stock Selection Based on Morning-
star’s Ten-Year, Five-Star General Equity Mutual Funds” continues the theme of timing the
market. They select the top stocks from Morningstar’s highest rated mutual funds to form
portfolios and measure the performance of them against the market as measured by the S&P
500. They find that the large cap stocks that are selected do not outperform the market. Very
unfortunately, this article is being published posthumously for Dr. Jordan whose entire
family was killed in an helicopter accident in Hawaii.

Risk tolerance is assumed to have an impact on portfolio allocations for investors at any
age, based on recent articles published in this journal. Govind Hariharan, Kenneth S.
Chapman, and Dale L. Domian’s article called “Risk Tolerance and Asset Allocation for
Investors Nearing Retirement” explores the impact of age and approaching retirement on
individual choices. They suggest that individuals do not alter their portfolios based on risk
tolerance and do decrease their dependence on Treasury Bills.

John E. Richard and James B. Wiggins’ article entitled, “The Information Content of
Closed-End Country Fund Discounts” tests two conflicting theories that seek to explain the
variations in closed-end fund premiums across funds and time. They use foreign country
funds from the prospective of the United States investor for their tests.

The last article by John C. Bost and Tony Cherin seeks to change the provisions of an
estate in an article they title, “Liquidating a Remainder Interest: Simplifying Personal
Finance”. They walk the reader through the steps necessary to dissolving a trust so that the
income beneficiaries can manage the remaining assets themselves.

All of these articles examine issues of individual financial management, which is the focus
of this journal. As Vickie L. Bajtelsmit’s special issue on retirement income (Volume 9,
Number 1) indicates, individuals are being given more and more responsibility for their
financial futures. TheFinancial Services Reviewencourages empirical research that provides
information to those who are interested in exploring and testing strategies and tactics that will
help the individual prosper in unknown environment that is likely to continuously change.

Karen Eilers Lahey

Financial Services Review 9 (2000) v

1057-0810/00/$ – see front matter © 2000 Elsevier Science Inc. All rights reserved.
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