Investing In Troubled Times? Best To Bet On Entrepreneurs

Newswise — Studied over an extended period of time, publicly traded stocks of companies led by entrepreneurs consistently outperform non-entrepreneurs by a wide margin, according to research by Babson Associate Professor Joel M. Shulman published in the November issue of The Investment Professional.

These results ring true even after comparing the entrepreneurial group against non-entrepreneur peers adjusted for industry sector, market size, geographic territory, and time period of study, according to Shulman, associate professor of entrepreneurship.

Shulman suggests that because entrepreneurs try to keep costs low while vigorously growing the business, entrepreneurial companies are well positioned to perform better than ever in a sluggish, recovering economy.

Shulman’s recent update on stocks for calendar 2009 show:

• Stocks of entrepreneur-led companies significantly outperform non entrepreneurs (YTD through 12/1/09, 650+ global entrepreneurs are up 93%);• Stocks of “bureaucrat” companies underperform non-bureaucrats and entrepreneurs by a wide margin (these are stocks that individuals would sell or sell short);• Stocks of entrepreneur-led companies continue to outperform non-entrepreneurs even after adjusting by market cap size, sector, geography, or time period.

Joel Shulman. “Investing in Troubled times: Entrepreneurs Are Your Safest Bet”, The Investment Professional, Fall 2009 http://www.theinvestmentprofessional.com/vol_2_no_4/investing-in-troubled-times.html

Babson College in Wellesley, Mass., is recognized internationally as a leader in entrepreneurial management education. Babson grants BS degrees through its innovative undergraduate program, and grants MBA and custom MS and MBA degrees through the F.W. Olin Graduate School of Business at Babson College. Babson Executive Education offers executive development programs to experienced managers worldwide. For information, visit www.babson.edu.