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An optimal investment strategy is “memoryless,” because it depends on present and expected future conditions, but not on the past. This article discusses the conditions required for a single, optimal investment strategy which the authors refer to as the memoryless trading rule. As a normative theory for investment decisions, memoryless trading requires an investment strategy or future course of action to describe what the trader will do when the markets achieve a given state. Memoryless trading also implies that when traders share a common utility function (which incorporates their risk preferences), wealth level, and trading orientation, there is a single, optimal investment strategy based upon market conditions. The authors show how some standard financial tools for comparing traders and measuring risk‐adjusted portfolio performance, e.g., the Sharpe ratio, violate the memoryless trading rule. They also discuss the relationship between memoryless trading and traditional equilibrium models of asset pricing.

Standard financial models predict that investors who are willing to hold an investment in the short‐run will hold the same investment for the long‐run. It is well known that a leveraged investment's expected excess return is equal to the unlevered excess return scaled by the leverage factor. Volatility is likewise scaled‐up by the leverage factor. It is not so well known, however, that the realized terminal wealth generated by the leveraged investment is very likely to be significantly lower than its expected value. This is true because leverage induces positive skewness into the distribution of long‐run wealth. The skewness and hence the probability of achieving a lower‐than‐expected terminal wealth increases with the length of time that a leveraged investment is held. Even for moderate leverage factors, this effect can be so dramatic that the leveraged investor will lag behind the unleveraged investor.

To assess changes in advertising the British children’s annual, Chatterbox, over the first three decades of the twentieth century.

The products/firms involved were identified and the advertisements classified into product groups. The advertising content was examined in terms of the intended audience and the five longest-running advertisements were analysed to gauge trends at the single-product level. Attention was also given to long-term changes at the product-group level, the effects of the Great War and the roles of the publisher, editor and advertisers.

In total, 457 advertisements were documented over 1900-1930 representing about 80 different products/firms. They were classified into 10 distinctive groupings with Food Ingredients, at almost 26 per cent of the total, being the most abundant. Overwhelmingly, the advertisements were directed at middle-class women/mothers (∼75 per cent of the total), then children (∼15 per cent) with men/fathers essentially being ignored. The five longest-running advertisements (over 25 per cent of the total) showed little evidence of change but there were significant trends at the product-group level, in marketing to children and in average advertisement size, particularly during the last two decades of the study period, partially reflecting gradual social and technological changes.

Comprehensive quantitative analysis of advertising in children’s magazine literature over several decades is problematic because of the difficulty in accessing sufficient source material. The present study is exhaustive and establishes a reference point for the assessment of advertising in similar publications in the post-Victorian era.