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The Future of Markets
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The case for the market economy has three pillars – the role of prices, as signals, the role of markets as a process of discovery, and the need to restrict the rent-seeking which arises from the concentration of economic power.
FT.com / Comment / Analysis - Wanted: new model for markets
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It is central to business schools’ curriculum and is part of the Chartered Financial Analyst qualification that acts as a gateway to the investment profession. Fund managers run their businesses by comparing their performance against benchmark indices, another idea from efficient markets. The products based on derivatives that grew notorious for their role in the market crash all stemmed directly from efficient markets theory.
If the theory needs to be abandoned, the effect on investing will be profound. More important still is what will come to replace it. Efficient markets borrowed from mathematics but that is now widely regarded as an oversimplified and often downright misleading theory that fostered the cavalier confidence leading to the crash.
FT.com / Markets / Insight - The flawed wisdom of crowds
The conventional wisdom of academic investment theorists is taking a terrible beating in the post-bubble era. Rightly so, in the case of the efficient market theory, which now gives rise to growing scepticism.
The notion that stocks follow a random walk and all available information is in the price has always looked suspect in the light of history, which repeatedly tells us that Homo economicus is not the rational man of the economists’ musings and that markets are prone to periodic bubbles. In its strongest form it even attributes the success of investors such as Warren Buffett and Fidelity’s Anthony Bolton to pure luck, which to my mind is too strong by half.
What Apple Knows That Facebook Doesn't - Umair Haque
Markets alter the basis of competition. Apple took something terminally closed - the mobile value chain -and pried it radically open. Facebook - still thinking in yesterday's terms - took something radically open - the www - and is trying to make it a little bit more closed.
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Markets alter the basis of competition. Apple took something terminally closed - the mobile value chain -and pried it radically open. Facebook - still thinking in yesterday's terms - took something radically open - the www - and is trying to make it a little bit more closed.
Meredith Whitney: The woman who called Wall Street's crisis - Aug. 4, 2008
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Whereas her peers keep searching for some sort of light at the end of the tunnel, Whitney thinks the tunnel is about to collapse. Bank stock investors will get crushed if they jump back in now, she contends, because the banks are facing much, much bigger credit losses than what they've reported so far. Moreover, Whitney is convinced that the economy is about to sink into an "early 1980s-style" recession that will devastate the 10% of the population that became overextended during the housing boom. "It feels like I'm at the epicenter of the biggest financial crisis in history," says Whitney.
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