I am writing a 15-20 page term paper over break for my senior seminar economics
class. I decided I am going to write on the topic of behavioral finance.
Including excerpts from
Manias, Panics Crashes- Kindleberger
Fooled by Randomness- Nassim Taleb
When Genius Fail
-I will look at sentiment indicators
-Collapse of the wise men running LTCM
-Capitulation
-Fibonacci
-Buffet comparison between superstar investors and finalists in a national coin
flipping contest.
-Tobin Q- Markets overvalued/undervalued
-John Maynard Keynes beauty contest
-sociological and psychological factors
And my thesis is going to prove that markets act irrational and no mathematical
formula will time business cycles they just happen.
Please give me suggestions to further my hypothesis. Thank you all!
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i doubt many ,if any thing, works 100% in the real world. unless they are hyper generalities i.e. the sun rises every day
but many things can work with high accuracy. why do seasonal trades work? why can we use lunar cycles on silver? why does the 4 year cycle low in stocks work so well? What about Andrew Lo's book about technical analysis? im just scratching the surface with these things. but do individuals act irrational when trading? of course. theyre working with imperfect information trying to predict the future. the unknown creates fear in the human mind and fear -- many times -- can lead to irrational actions.
those are my first thoughts. from the standpoint of someone studying something
1. your thesis shouldnt PROVE anything. A thesis is just a starting point, an assumption.
2. to be at all scientific about your study of anything you should always be attempting to prove your thesis wrong as opposed to right. if i have a thesis that fundamental analysis sucks, i wanna try and find all the ways it CAN work. if i find nothing, then i prove my point.