25 quotes
Thus the so-called Moore's law is incorrect, since it implies only an exponential growth.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The point is that humans are rarely at their best when they use rational reasoning.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
Since it is the actions of investors whose buy and sell decisions move prices up and down, any deviation from a random walk has ultimately to be traced back to the behavior of investors.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The incentives that people need to work and to find meaning in their lives should be found beyond material wealth and power.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
Perhaps the most profound synthesis of physical sciences came from the realization that everything could be understood from "conservation laws" and symmetry principals.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
Indeed, the financial world is such that any insight is almost immediately used to trade for a profit.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The problem is not that this optimistic view is wrong. By economic accounting, the optimistic view is mostly right.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The price of a stock is strongly influenced by the behavior of the traders in a nontrivial way.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
A bubble that goes up is just one that could have crashed but did not.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
One trader's move in the market can be interpreted by another trader as relevant additional information due to the uncertainty he faces.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
Finally, empirical data suggests that assets are sold much more slowly during retirement years than when they are accumulated during working years.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
Knowledge is encoded in models. Models are synthetic sets of rules, and pictures, and algorithms providing us with useful representations of the world of our perceptions and of their patterns.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
Positive feedbacks, when unchecked, can produce runaways until the deviation from equilibrium is so large that other effects can be abruptly triggered and lead to ruptures and crashes.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The acceleration of the number of traders buying into the market in the inflating bubble captures the oft-quoted observation that bubbles are times when the "greater fool theory" applies.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The phenomena and underlying mechanisms discussed in this book may thus become even more relevant to a larger and larger portion of human activity. Understand their origin, and be prepared for subtle but significant precursors!
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
In order to have a continuing influence, the stock market has to continue rising at an accelerating pace faster than exponential. Only a faster-than-exponential stock market growth makes private investors feel richer.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The assumption of perfectly rational, maximizing behavior won out until recently in the art of modeling, not because it often reflects reality, but because it was useful.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The old Wall Street saying " buy on rumors, sell on the news," is alive and well, as can be seen from numerous sources in the media and the Internet. Rumors can drive herding behavior strongly.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
Profiting from being in the minority leads to interesting paradoxes. Rather diabolically, if all traders use the same set of rules, they will end up doing the same thing at the same time and cannot therefore be in the minority.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)
The same basic ingredients are found repeatably: fueled by initially well founded economic fundamentals, investors develop a self-fulfilling enthusiasm by an imitative process or crowd behavior that leads to an unsustainable accelerating overvaluation.
Why Stock Markets Crash - Critical Events in Complex Systems (2003)