You just joined a new upstart firm that is focused on managing investments and particularly excess returns. Your goal is to find whether you can use any of the models you know to predict those excess returns. You have managed to secure a few clients that are interested in investing in stocks of the S&P500. Specifically, you have two clients: Gregory House and James Wilson. House is interesting in having a portfolio of stocks (more than 2 stocks), while Wilson is interested in individual stocks (1 stock). Both clients want you to pick the stocks to be used.
You must write a short report of max 1000 words, where you are briefly explaining the model(s), their results, how good (or ineffective) the models are at predicting excess returns of your clients demands, and which one you would prefer out of those used.
Extra credit: Examine in the literature what other approach you could employ to predict those excess returns (also known as equity premium).
