Hidden Collective Factors in Speculative Trading: A Study in Analytical Economics
Author: Bertrand M. Roehner
List Price: $56.95
Our Price: Click to see the latest and low price
ISBN: 3540412948
Publisher: Springer Verlag (01 March, 2001)
Sales Rank: 1,096,017
Average Customer Rating: 5 out of 5
Customer Reviews
Rating: 5 out of 5
A prediction about the NASDAQ and other great stories
Published in January 2001 this book contains
(p. 176) a prediction about the course of the
NASDAQ that up to now (i.e. 27 October 2002) is
fairly well matched by the actual fall of the
NASDAQ Composite Index over the period 2000-2002.
Strangely enough, that prediction is not based
on a sophisticated stochastic model, but rather
on the observation of previous stock price
peaks such as the one in Paris in 1882, the crash
in Paris in early 1929, the crash in New York in late
1929 and several others.
You may think that such an approach based on the analysis
of recurrent events after all is not different from
what chartists are doing. There is however a big difference.
Here the approach works
because it compares events which
are brought about by similar phenomena.
An example may
help to better understand that point. Obviously, it
would be an hopeless task to base a forecast of tomorrow's
weather on the weather observed on previous days. However,
it does make sense in August
to forecast the average temperature
in New York City six months later for this prediction
is based on
a well-defined phenomenon, namely the rotation of the
Earth around the Sun. Similarly, the author shows that
behind stock price peaks there are
indeed specific recurrent phenomena; note that these
phenomena are not confined to the sole financial sphere
but are deeply rooted in the society as a whole.
The book is not only about stock markets but considers
all kinds of speculative fever whether affecting stocks,
real estate, postage stamps, collector books, sugar, silver
or diamonds. The section about real estate markets
is of particular interest at the present moment. It shows
that real estate price peaks ressemble stock price
peaks in the sense that they are almost symmetrical with
respect to the maximum, but they are smoother and
the shift from the up- to the down-going
phase is gradual instead
of being sudden and abrupt as was the case for the NASDAQ.
At the end of the book the author provides several useful
data sets such as real estate prices in Britain and
Paris, price of individual NYSE stocks during the crash of
1929 and so on.
There is an insightful story on almost every page of this
book. Highly recommended.
Book Index