Re: Bear Cave 2 (Bull Allowed)
Don't Worry Baby - Everything will turn out Alright…… and I agree, but when?
Sure - Sure - I know, yeah, it has to be, it can't happen again so soon, ha....I'm not worried at all. It really is different this time - shoot, we have QE2 now don't we? Ha....I'm not worried at all...Are you?
Good trading to both Bulls and Bears....Money to be made both ways, but pigs get....well,
you know!
Robo
We've seen time and again that the standard model of rational financial economics is next to useless at predicting anything at all useful about stock markets.
Yet, despite this, the model is retained and used in many forms, often disguised and packaged to look like something new and valuable.
Inevitably it turns out to be neither as soon as it's needed.
Putting to one side the unworthy thought that the world's major financial institutions are managed by idiots, the fact that these models continue to attract support and investment seems to suggest that there's something wrong with the alternative.
If behavioural finance--the study of how human psychological biases distort markets--is so much better than the models of rational, calculating, utility-balancing economic man, why do we cling so to the old ways?
Although as there are world leaders out there who still use astrology to make decisions, perhaps we shouldn't be too surprised.
At some point, though, for some reason external to the market, such as excitement over the internet or the Space Race or railroads or tulips or bronze helmets or fig leaves or something, a majority of investors start to exhibit the same biases--usually starting in the form of people losing their fear of losing money.
Markets take off on a roll attracting more and more loose money until such time as the boom can't be sustained and everything goes into terrified reverse.
--"Timarr", "The Special Theory of Behavioural Finance", PsyFiTec.com, August 20, 2009.
“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side” Jesse L. Livermore
Bookmarks