Quote of the Day

Just finished reading Benoit Mandelbrot’s utterly essential The Misbehavior of Markets again (i.e., this, like Reminiscences, has become a perpetual read for me), therefore, a flurry of quotes are likely to come your way over the next few days.

Here’s today’s:   emphasis mine…

“Reality: Patently, people are not alike—even if differences in wealth are disregarded. Some buy and hold stocks for twenty years, for a pension fund; others flip stocks daily, speculating on the Internet. Some are “value” investors who look for stocks in good companies temporarily out of fashion; others are “growth” investors who try to catch a ride on rising rockets. Once you drop the assumption of homogeneity, new and complicated things happen in your mathematical models of the market. For instance, assume just two types of investors, instead of one: fundamentalists who believe that each stock or currency has its own, intrinsic value and will eventually sell for that value, and chartists who ignore the fundamentals and only watch the price trends so they can jump on and off bandwagons. In computer simulations by economists Paul De Grauwe and Marianna Grimaldi at the Catholic University of Leuven, in Belgium, the two groups start interacting in unexpected ways, and price bubbles and crashes arise, spontaneously. The market switches from a well-behaved “linear” system in which one factor adds predictably to the next, to a chaotic “non-linear” system in which factors interact and yield the unanticipated. And that is with just two classes of investors. How much more complicated and volatile is the real market, with almost as many classes as individuals?”

Share:

Recieve Between the Lines Posts to your Inbox

Sign up for lorem ipsum delores sin.

We care about the protection of your data. Read our Privacy Policy.
vulkan vegas, vulkan casino, vulkan vegas casino, vulkan vegas login, vulkan vegas deutschland, vulkan vegas bonus code, vulkan vegas promo code, vulkan vegas österreich, vulkan vegas erfahrung, vulkan vegas bonus code 50 freispiele, 1win, 1 win, 1win az, 1win giriş, 1win aviator, 1 win az, 1win azerbaycan, 1win yukle, pin up, pinup, pin up casino, pin-up, pinup az, pin-up casino giriş, pin-up casino, pin-up kazino, pin up azerbaycan, pin up az, mostbet, mostbet uz, mostbet skachat, mostbet apk, mostbet uz kirish, mostbet online, mostbet casino, mostbet o'ynash, mostbet uz online, most bet, mostbet, mostbet az, mostbet giriş, mostbet yukle, mostbet indir, mostbet aviator, mostbet casino, mostbet azerbaycan, mostbet yükle, mostbet qeydiyyat