Search Results

Focuses on dynamic models. The emphasis is on explaining technical analysis. These models show that past prices still carry valuable information. Some of these models also explain why it is rational for some investors to ‘chase the trend’. Other models are devoted to the informational role of trading volume. The insiders’ optimal dynamic trading strategy over different trading periods is derived in a strategic model setting.

Wall Street strategists are susceptible to gambler's fallacy. In general, four important behavioral elements affect the market predictions of investors: overconfidence, betting on trends, anchoring and adjustment, and salience. Although gambler's fallacy generally afflicts Wall Street strategists, it typically does not afflict individual investors and technical analysts—they succumb to other errors. This point leads to a discussion about some of the key illusions that most people have about randomness, and why these illusions bias their predictions. Inflation adds an additional element of confusion.

This chapter considers the relationship between verbal forms in the Greek Pentateuch and the underlying Hebrew text components, so as to establish degrees of independence in the Greek usage. In approaching the Greek-Hebrew formal comparisons, three issues must be addressed: the necessity for a methodology different from conventional translation-technical analysis; questions regarding the Hebrew text to be used as the basis for comparison; and complications concerning classification of Hebrew forms. It is apparent from this chapter that classification of Hebrew formal matches involves numerous difficulties. Nevertheless, consistent application of the method described provides a model for their resolution. The vast bulk of Greek-Hebrew formal matches in the Pentateuch are clear-cut.

This chapter considers another important need for successful investing: an accurate estimate of a security's intrinsic value. All approaches to investing in company securities can be divided into two basic types: those based on analysis of the company's attributes, known as “fundamentals,” and those based on study of the price behavior of the securities themselves. In other words, an investor has two basic choices: gauge the security's underlying intrinsic value and buy or sell when the price diverges from it, or base decisions purely on expectations regarding future price movements. This chapter first discusses technical analysis and momentum investing before turning to value investing and growth investing. In particular, it explains the difference between value investors and growth investors. It also highlights the potential of value investing to consistently produce favorable results.

This chapter is about a vital expectation for successful investing: an accurate estimate of intrinsic value. Warren Buffett says that the best investment course would teach just two things well: how to value an investment and how to think about market price movements. All approaches to investing in company securities can be divided into two basic types: those based on analysis of the company’s attributes, known as “fundamentals,” and those based on study of the price behavior of the securities themselves. This chapter explains what technical analysis is and proceeds by describing momentum investing. It also considers two principal schools of investing, both driven by fundamentals: value investing and growth investing. In particular, it highlights value investing’s potential to consistently produce favorable results. The chapter includes comments and insights from four renowned investors and investment educators.

This chapter examines how behavioral factors influence financial decision processes. It takes a behavioral perspective to explain phenomena in financial markets that the neoclassical view of rationally acting agents has trouble explaining. Among these puzzles are the equity premium puzzle and excess volatility. Starting from theoretical challenges to the neoclassical view of thinking including prospect theory, the chapter discusses the most important heuristics and biases in decision making that help to explain empirically observed asset prices including the role of overconfidence and noise traders on financial markets. The chapter also discusses collective behavior such as herding.