HIDDEN COLLECTIVE FACTORS IN SPECULATIVE TRADING GANDOLFO G. Księgarnia

Hidden Collective Factors in Speculative Trading

A Study in Analytical Economics

Roehner, B.M., University of Paris VII, Paris, France

Besides analyzing stock markets, the book considers a wide range of speculative markets for various items such as real estate, commodities , postage-stamps, antiquarian books. In particular, it highlights the following regularities:(i) During a speculative episode, the price of expensive items increases more than the price of less expensive items. This is referred to as price multiplier effect.(ii) Price peaks for stocks and most commodities on average follow a well-defined pattern that we call the sharp peak - flat through pattern; in contrast real estate price peaks follow a flat peak pattern.(iii) The stocks whose prices experience the strongest increase during a bull market, better resist during the subsequent bear market, an effect referred to as the resilience pattern. Such regularities pave the way for a mathematical theory of speculation. Being mainly empirical, the book is easy to read and does not require technical prerequisites in finance, economics or mathematics.

Keywords: Speculation, Speculative Trading, Speculative Bubbles, Real-Estate Markets, Stock Markets

Contents: Prologue: Introduction.- "Practical" versus "solvable" questions; A crucial step: finding regularities; Basic features of our approach; Presentation of the book; Overall view of speculative markets.- Overview of speculative markets; Comparative perspective; Hidden collective determinants: Rational?.- Hidden preconceptions: long-term perspective; Hidden preconceptions in economics rationality: medium-term perspective; Application to speculative trading; Joint crashes.- Is speculation in diamonds related to speculation in cobalt?; Are property bubbles in Tokyo and Paris related?; Interdependence between different speculative markets; Conclusion; Contagion of speculative frenzy.- Social contagion; Volume of trade as an indicator of the extension of speculation; Why can a bull market not last forever?; Regularities in speculative episodes: Peak amplitude: the price multiplier effect.- A case in point: property speculation in Britain; Generalization of the price multiplier effect; Implications and significance of the price multiplier effect; Application of the price multiplier effect to stocks; Peak shape: the sharp peak flat trough pattern.- Describing speculative peaks; Is there a pattern for stock price peaks?; Stock market bubbles.- A case in point: 1929; Comparative analysis; Epilogue.

Last update: 11.04.2002
229 pages

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