 |
|
| Science Forum Index » Fractals Science Forum » Physics can predict a bear run on bourse... |
|
Page 1 of 1 |
|
| Author |
Message |
| Roger Bagula... |
 Posted: Mon Sep 14, 2009 7:35 am |
|
|
|
Guest
|
http://economictimes.indiatimes.com/Physics-can-predict-a-bear-run-on-bourse/articleshow/4947152.cms
Physics can predict a bear run on bourse
29 Aug 2009, 0610 hrs IST, AGENCIES
Stock market crashes have a penchant for landing out of the blue. Now
a team of physicists and financiers have bucked the trend by
successfully
predicting a steep fall in the Shanghai Stock Exchange.
Their model, which employs concepts from the physics of complex atomic
systems, was developed by Didier Sornette of the Financial Crisis
Observatory in Zurich, Switzerland, and Wei-Xing Zhou of the East
China University of Science and Technology in Shanghai.
The idea is that if a plot of the logarithm of the market’s value over
time deviates upwards from a straight line, it’s a clear warning that
people are investing simply because the market is rising rather than
paying heed to the intrinsic worth of companies . By projecting the
trend, the team can predict when growth will become unsustainable and
the market will crash.
Sornette, Zhou and colleagues applied their model to the Shanghai
Composite Index, which tracks the combined worth of all companies
listed on the Shanghai Stock Exchange, the world’s second largest.
Early this year, the index gained 50% in just four months. In July,
the team predicted that the index would start to fall sharply by 10
August . The index duly began to slide on 4 August, falling almost 20%
in the subsequent two weeks, reported New Scientist.
Anyone hoping to exploit the model for profit should think twice. “If
enough investors take action based on our predictions, the evolution
of prices will probably be affected,” says Zhou.
Another study released on Friday found that women with more
testosterone tend to behave more like men when taking financial risks.
US researchers found women with higher levels of the hormone were
seven times more likely to take risks than women with lower hormone
levels. |
|
|
| Back to top |
|
|
|
|
|
All times are GMT - 5 Hours
The time now is Mon Dec 07, 2009 11:27 pm
|
|