Hello, dear members and visitors!

Here comes our 72nd month newsletter.

1) Monthly activity

Our total membership increased by about 15 to reach
the 1575 mark. We had a favorable combination with
less bouncing members and a better subscribers /
unsubscribers balance

On the other hand the number of messages was under 20
in the month, now totalling 7480. Anyway, we had some
interesting communications about the biological /
genetic side of trading and the secrets of brain cells.
With some insights on how sex can derail investor
decisions. Boy, BF is becoming an adult topic, please
show your ID card at the gate ;-)

My initiative to propose a discussion on a "definition of
the month" was resultless so far. I will try again during
the next couple of months, to see if it starts to rise some
interest. It might be useful, if only to help maintain and
enhance the BF glossary

In our sister list, Finance-academy, membership grew a
little with 330+ members, not including  bouncing ones.
http://groups.yahoo.com/group/Finance-Academy

2) Free BF resources
Free goodies at your fingertips 24/7:

* Your permanently updated BF glossary
Currently 500 keywords. Many definitions are in the form of
detailed articles.
http://perso.wanadoo.fr/pgreenfinch/bfglo/bfglo.a.htm
=> Don't forget : every glossary page gives a link to a
"quality" poll. Give your opinion, every little helps !

* Martin Sewell's academic treasure chest in BF topics,
that site is a must for students and researchers:
http://behaviouralfinance.net/

* Your behavioral stockpricer. To use it, do your homework
first. A challenge, hey ? give it a try:
http://perso.wanadoo.fr/pgreenfinch/pricer.htm

* Our group charter
http://finance.groups.yahoo.com/group/Behavioral-Finance/files/
(click BF Group charter.doc)
also available at:
http://perso.wanadoo.fr/pgreenfinch/befigrouppolicy.htm

* Access to all yahoo group's resources (polls, links and
files)
You need a *yahoo ID/profile*. To get it, click "account
info" (in the group's homepage or your "my groups" page)
and fill in the info you deem appropriate

Wishing for many quality info and debates in this new month

Peter

As said in the two last newsletter, I try every month
to submit an article from the BF glossary, not only
for information and to start a debate on the topic, but
also to get your observations, criticisms, and
suggestions to complete and improve the article.

This month, let us look at this one:
http://perso.wanadoo.fr/pgreenfinch/bfglo/bfglo.cascade.htm

   ** START **
An information cascade is a series of self-reinforcing information.
This cumulative phenomenon is an example of "positive feedback loop"
where events get farther and farther from the mean, in a vicious (or
sometime virtuous) spiral.

The effect on market prices

An information cascade creates - or reinforces - upwards or downward
market price trends. It starts either:

* From a positive or negative exogenous (= coming from the economic
sphere) information,

By the way, the economy also can have its own self reinforcing
phenomena. They lead to economic development or economic decline in
the long term, or to expansion or depression in shorter periods.
Inflation spirals are also an example of the effect of cascades,
when people buy and hoard goods by fear of inflation, contributing
themselves to the price rise.

* And/or from an endogenous info (from the financial market itself).
In this case:

1) The first information is some conspicuous market price rise or
fall. Some people take it as a signal that some traders are buying
or selling. They think that "they must know something that I don't
know".

2) Thus they buy or sell in their turn. Those actions reinforce the
rise or fall.

3) This new move creates the feeling among investors that the trend
is confirmed. It attracts even more people, who think there must be
a good reason for it. A third wave of people see that and they act
on their turn, and things are cascading on and on.

Thus, even a lack of initial information by the first people who
started the trend can solidify into an information for the next ones
who saw them acting, It shows that the trend can start out of
nothing.

Are information cascades rational?

There is more rationality and consciousness in information cascades
than in pure emotional herding, even if it can be a perverse
rationality.

In a cascade, investors decide consciously not to use their private
information. They deliberately consider the information on price
orientation given by others more relevant than what they know by
themselves, thinking they are under informed.

As for herding (see that word), it can come later, if emotions such
as greed, fear, pride, envy or whatever other feelings come into
play.

Examples

Here are examples in two opposite directions, a market rise and a
market fall:

1) Bullish cascade. In a first step, a stock price rise happens at
random, without any relevant exogenous event (due to noise traders
activity for example). This rise is seen by some investors as a
positive information. They act on this belief and this initiates a
new price rise, which in its turn attracts the attention of other
investors.

The steady arrival of new buyers each time there is a new rise, who
think that those who bought just before them must know something,
fosters progressively a bullish trend or even a bubble.

2) Bearish cascade. Cascades take place also in bearish trends and
crashes. Some first investors get weary or cautious, even if no
relevant new event takes place to cause it. Under such impression,
they leave the game. They are then followed by others. Crashes
usually starts out of the blue, without new exogenous economic
events.

This does not mean there are no reason at all, as overpricing is the
real cause. But the precise moment when the market will act on it is
rather unpredictable, there are usually no discernible early
warnings that the party is over.
    ** END **

So, what are your thoughts on the topic ? And your
advice and suggestions about the article ? Thanks.

Peter

Hi,

I am new in this Group. I got interested in Behavioral Finance and am
currently writing a paper 'Behavioural Finance: impact of Psychology
on Speculative Bubbles'. Can you guys give me some directions and
useful papers? I used primarily Fama to explain the efficient markets
theory and Shiller for the behavioral finance perspective....

Thanks

What do you mean by "..Speculative Bubbles?"

Are there non-speculative bubbles, or are you
using that descriptor for effect rather than
for some analytical distinction?

Respectfully,

Bob Bronson
Bronson Capital Markets Research
http://www.financialsense.com/editorials/bronson/main.html




-----Original Message-----
From: Behavioral-Finance@yahoogroups.com
[mailto:Behavioral-Finance@yahoogroups.com] On Behalf Of
pietvanwaes
Sent: Wednesday, May 10, 2006 2:40 AM
To: Behavioral-Finance@yahoogroups.com
Subject: [Behavioral-Finance] Speculative Bubbles

Hi,

I am new in this Group. I got interested in Behavioral
Finance and am currently writing a paper 'Behavioural
Finance: impact of Psychology on Speculative Bubbles'. Can
you guys give me some directions and useful papers? I used
primarily Fama to explain the efficient markets theory and
Shiller for the behavioral finance perspective....

Thanks








------------------------ Yahoo! Groups Sponsor
--------------------~--> Get to your groups with one click.
Know instantly when new email arrives
http://us.click.yahoo.com/.7bhrC/MGxNAA/yQLSAA/zMEolB/TM
------------------------------------------------------------
--------~->

you may unsubscribe by sending an email to

Behavioral-Finance-unsubscribe@yahoogroups.com

Yahoo! Groups Links

At 10:21 10/05/2006 -0600, Bob Bronson wrote:
>What do you mean by "..Speculative Bubbles?"

An economic bubble is sometimes referred to as a "speculative bubble".

>Are there non-speculative bubbles,

There are soap bubbles!

Martin

Thanx for your thoughts, Martin.

Now we'll see what pievanwaes's response is.


-----Original Message-----
From: Behavioral-Finance@yahoogroups.com
[mailto:Behavioral-Finance@yahoogroups.com] On Behalf Of
Martin Sewell
Sent: Wednesday, May 10, 2006 11:20 AM
To: Behavioral-Finance
Subject: RE: [Behavioral-Finance] Speculative Bubbles

At 10:21 10/05/2006 -0600, Bob Bronson wrote:
>What do you mean by "..Speculative Bubbles?"

An economic bubble is sometimes referred to as a
"speculative bubble".

>Are there non-speculative bubbles,

There are soap bubbles!

Martin


-----Original Message-----
From: Bob Bronson [mailto:Bob@...]
Sent: Wednesday, May 10, 2006 10:22 AM
To: 'Behavioral-Finance@yahoogroups.com'
Subject: RE: [Behavioral-Finance] Speculative Bubbles

What do you mean by "..Speculative Bubbles?"

Are there non-speculative bubbles, or are you using
that descriptor for effect rather than for some
analytical distinction?

Respectfully,

Bob Bronson
Bronson Capital Markets Research
http://www.financialsense.com/editorials/bronson/main.html




-----Original Message-----
From: Behavioral-Finance@yahoogroups.com
[mailto:Behavioral-Finance@yahoogroups.com] On Behalf Of
pietvanwaes
Sent: Wednesday, May 10, 2006 2:40 AM
To: Behavioral-Finance@yahoogroups.com
Subject: [Behavioral-Finance] Speculative Bubbles

Hi,

I am new in this Group. I got interested in Behavioral
Finance and am currently writing a paper 'Behavioural
Finance: impact of Psychology on Speculative Bubbles'. Can
you guys give me some directions and useful papers? I used
primarily Fama to explain the efficient markets theory and
Shiller for the behavioral finance perspective....

Thanks








------------------------ Yahoo! Groups Sponsor
--------------------~--> Get to your groups with one click.
Know instantly when new email arrives
http://us.click.yahoo.com/.7bhrC/MGxNAA/yQLSAA/zMEolB/TM
------------------------------------------------------------
--------~->

you may unsubscribe by sending an email to

Behavioral-Finance-unsubscribe@yahoogroups.com

Yahoo! Groups Links

Hi everybody,

I need some advice from you guys, I have to undertake an empirical
study in Behavioural Finance and I was thinking about overreaction of
the stock market to news. What do you think? Could you suggest a
published paper that I could look at the methodology or even could you
suggest any other study. I would really appreciate the advise

Many many thanks

Andy

Hi everybody,

I need some advice from you guys, I have to undertake an empirical
study in Behavioural Finance and I was thinking about overreaction of
the stock market to news. What do you think? Could you suggest a
published paper that I could look at the methodology or even could you
suggest any other study. I would really appreciate the advise

Many many thanks

Andy

Hi everybody,

I need some advice from you guys, I have to undertake an empirical
study in Behavioural Finance and I was thinking about overreaction of
the stock market to news. What do you think? Could you suggest a
published paper that I could look at the methodology or even could you
suggest any other study. I would really appreciate the advise

Many many thanks

Andy







you may unsubscribe by sending an email to

Behavioral-Finance-unsubscribe@yahoogroups.com

Send instant messages to your online friends http://uk.messenger.yahoo.com

Dear Ekrem,

I am sure you are right. :-) And I already checked the web page but
with all these papers its hard to read all of them and choose a
comprehensive one as a basis for my study (its even more difficult to
do so when you are "new" in the field of behavioural finance).

Thanks for the reply.....back to reading now!!!!!

Andy

--- In Behavioral-Finance@yahoogroups.com, ekrem tufan <etufan@...> wrote:
>
>
>   Dear Andy,
>   I know our moderator will say you please have a check this webpage
first:
>   http://www.behaviouralfinance.net/
>
>   My best wishes,
>   Ekrem
>
>
>
> xnica01 <xnica01@...> wrote:
>   Hi everybody,
>
> I need some advice from you guys, I have to undertake an empirical
> study in Behavioural Finance and I was thinking about overreaction of
> the stock market to news. What do you think? Could you suggest a
> published paper that I could look at the methodology or even could you
> suggest any other study. I would really appreciate the advise
>
> Many many thanks
>
> Andy
>
>
>
>
>
>
>
> you may unsubscribe by sending an email to
>
> Behavioral-Finance-unsubscribe@yahoogroups.com
>
>
>
>
>   SPONSORED LINKS
>         Business finance course   Business to business finance
Small business finance     Business finance consultant   Business
finance magazine   Business finance schools
>
> ---------------------------------
>   YAHOO! GROUPS LINKS
>
>
>     Visit your group "Behavioral-Finance" on the web.
>
>     To unsubscribe from this group, send an email to:
>  Behavioral-Finance-unsubscribe@yahoogroups.com
>
>     Your use of Yahoo! Groups is subject to the Yahoo! Terms of
Service.
>
>
> ---------------------------------
>
>
>
>
>
> Ekrem TUFAN
> Assist. Prof. Dr.
> Anadolu Uni. A.O.F. Canakkale Office
>
> Cevatpasa Mah. Mehmet Akif Ersoy Cad. Nergis Apt. No: 3/1
Canakkale/TURKEY 17100
> Tel:+90 286 213 02 61
> Facimile: + 90 286 212 98 64
> http://ssrn.com/author=87110
>
> ---------------------------------
> Get amazing travel prices for air and hotel in one click on Yahoo!
FareChase
>

At 12:10 11/05/2006 +0000, xnica01 wrote:
>Dear Ekrem,
>
>I am sure you are right. :-) And I already checked the web page but
>with all these papers its hard to read all of them and choose a
>comprehensive one as a basis for my study (its even more difficult to
>do so when you are "new" in the field of behavioural finance).

"Does the Stock Market Overreact?" by De Bondt and Thaler (1985) is
the classic.

Regards

Martin

Hi everybody,

I need some advice from you guys, I have to undertake an empirical
study in Behavioural Finance and I was thinking about overreaction of
the stock market to news. What do you think? Could you suggest a
published paper that I could look at the methodology or even could you
suggest any other study. I would really appreciate the advise

Many many thanks

Andy

Dear Andy,

I think you can start with the attached paper written by Ritter.

Good Luck in your study.

xnica01 <xnica01@...> wrote:

Hi everybody,

I need some advice from you guys, I have to undertake an empirical
study in Behavioural Finance and I was thinking about overreaction of
the stock market to news. What do you think? Could you suggest a
published paper that I could look at the methodology or even could you
suggest any other study. I would really appreciate the advise

Many many thanks

Andy

Ali Reza Talebi

---

Love cheap thrills? Enjoy PC-to-Phone calls to 30+ countries for just 2¢/min with Yahoo! Messenger with Voice.

Dear Members and Friends,

I would like to inquire whether anybody has data on
monthly gross dividend yields for the Kuala Lumpur
Composite Index (KLCI). I checked with the Kuala
Lumpur Stock Exchage and they have only historical
monthly data from 1990 onwards.  Appreciate if anyone
who has done research on the Malaysian stock market
can help.

Best Regards,
Gary Rangel
PhD student
University Science Malaysia

__________________________________________________
Do You Yahoo!?
Tired of spam?  Yahoo! Mail has the best spam protection around
http://mail.yahoo.com

I am trying to find conferences, seminars, or workshops on
Behavioral Finance taking place in the US in 2006. Could you please
let me know of any events that you know of?

I will greatly appreciate your help!

Dear Members and Friends,

I would like to inquire whether anybody has data on
monthly gross dividend yields for the Kuala Lumpur
Composite Index (KLCI). I checked with the Kuala
Lumpur Stock Exchage and they have only historical
monthly data from 1990 onwards.  Appreciate if anyone
who has done research on the Malaysian stock market
can help.

Best Regards,
Gary Rangel
PhD student
University Science Malaysia

__________________________________________________
Do You Yahoo!?
Tired of spam?  Yahoo! Mail has the best spam protection around
http://mail.yahoo.com

Send instant messages to your online friends http://uk.messenger.yahoo.com

Hi all
Can anybody please tell me if knows any Exchange adound the wold for
Iron or Steel ?


Thanx

Thomas

---

To: Behavioral-Finance@yahoogroups.com
From: tomarast@...
Date: Thu, 18 May 2006 10:01:44 +0000
Subject: [Behavioral-Finance] Iron

Hi all
Can anybody please tell me if knows any Exchange adound the wold for
Iron or Steel ?


Thanx

Thomas






you may unsubscribe by sending an email to

Behavioral-Finance-unsubscribe@yahoogroups.com

SPONSORED LINKS

Business finance course	Business to business finance	Small business finance
Business finance consultant	Business finance magazine	Business finance schools

---

YAHOO! GROUPS LINKS

•  Visit your group "Behavioral-Finance" on the web.
   
•  To unsubscribe from this group, send an email to:
   Behavioral-Finance-unsubscribe@yahoogroups.com
   
•  Your use of Yahoo! Groups is subject to the Yahoo! Terms of Service.

---

I am trying to find conferences, seminars, or workshops on
Behavioral Finance taking place in the US in 2006. Could you please
let me know of any events that you know of?

I will greatly appreciate your help!

I think I would like to hang around here for a while.

When I was a college student as Texas A&M University about a thousand
years ago, the Economics Department was referred to in some circles as
the University of Chicago of the South. While a great deal of economic
theory makes sound intellectual sense, I would frequently take
exception to the assumptions underlying most conclusions. For example,
individuals do not have complete knowledge of all aspects of an
economic decision nor do they always operate in their own
self-interest. (Always and never are words to look out for in any
discipline except maybe mathematics).

In any event, I was delighted to encounter a reference to Behavioral
Economics in a recent article in The Economist (how do you turn on
italics with this interface?) and even more pleased to stumble upon
this group whose existence implies there are a lot of thinking folk out
there (as opposed to those looking for a "scientific" justification for
pathological behavior). Two of the ultimate products of old school
economics and other supporters of unrestrained capitalism were
convicted in Houston today, so I am feeling gratified at turns in both
the academic and the "real" world.

Will you provide a link to the article?

--- Martin Coady <mjohncoady@...> wrote:

> I think I would like to hang around here for a
> while.
>
> When I was a college student as Texas A&M University
> about a thousand
> years ago, the Economics Department was referred to
> in some circles as
> the University of Chicago of the South. While a
> great deal of economic
> theory makes sound intellectual sense, I would
> frequently take
> exception to the assumptions underlying most
> conclusions. For example,
> individuals do not have complete knowledge of all
> aspects of an
> economic decision nor do they always operate in
> their own
> self-interest. (Always and never are words to look
> out for in any
> discipline except maybe mathematics).
>
> In any event, I was delighted to encounter a
> reference to Behavioral
> Economics in a recent article in The Economist (how
> do you turn on
> italics with this interface?) and even more pleased
> to stumble upon
> this group whose existence implies there are a lot
> of thinking folk out
> there (as opposed to those looking for a
> "scientific" justification for
> pathological behavior). Two of the ultimate products
> of old school
> economics and other supporters of unrestrained
> capitalism were
> convicted in Houston today, so I am feeling
> gratified at turns in both
> the academic and the "real" world.
>
>
>
>
>
>
>
>


__________________________________________________
Do You Yahoo!?
Tired of spam?  Yahoo! Mail has the best spam protection around
http://mail.yahoo.com

I think I would like to hang around here for a while.

When I was a college student as Texas A&M University about a thousand
years ago, the Economics Department was referred to in some circles as
the University of Chicago of the South. While a great deal of economic
theory makes sound intellectual sense, I would frequently take
exception to the assumptions underlying most conclusions. For example,
individuals do not have complete knowledge of all aspects of an
economic decision nor do they always operate in their own
self-interest. (Always and never are words to look out for in any
discipline except maybe mathematics).

In any event, I was delighted to encounter a reference to Behavioral
Economics in a recent article in The Economist (how do you turn on
italics with this interface?) and even more pleased to stumble upon
this group whose existence implies there are a lot of thinking folk out
there (as opposed to those looking for a "scientific" justification for
pathological behavior). Two of the ultimate products of old school
economics and other supporters of unrestrained capitalism were
convicted in Houston today, so I am feeling gratified at turns in both
the academic and the "real" world.

__________________________________________________
Correo Yahoo!
Espacio para todos tus mensajes, antivirus y antispam ¡gratis!
Regístrate ya - http://correo.espanol.yahoo.com/

Just to let you know, that at the school of business of the University of Chicago
there  is one of the most active research program of BEHAVIORAL FINANCE and one of the most salient professor in the area Richard Thaler teach there.
Martin Coady <mjohncoady@...> escribió:

I think I would like to hang around here for a while.

When I was a college student as Texas A&M University about a thousand
years ago, the Economics Department was referred to in some circles as
the University of Chicago of the South. While a great deal of economic
theory makes sound intellectual sense, I would frequently take
exception to the assumptions underlying most conclusions. For example,
individuals do not have complete knowledge of all aspects of an
economic decision nor do they always operate in their own
self-interest. (Always and never are words to look out for in any
discipline except maybe mathematics).

In any event, I was delighted to encounter a reference to Behavioral
Economics in a recent article in The Economist (how do you turn on
italics with this interface?) and even more pleased to stumble upon
this group whose existence implies there are a lot of thinking folk out
there (as opposed to those looking for a "scientific" justification for
pathological behavior). Two of the ultimate products of old school
economics and other supporters of unrestrained capitalism were
convicted in Houston today, so I am feeling gratified at turns in both
the academic and the "real" world.

__________________________________________________
Correo Yahoo!
Espacio para todos tus mensajes, antivirus y antispam ¡gratis!
Regístrate ya - http://correo.espanol.yahoo.com/

My idea in this topic is, the future of behavioral
finance and standard finance should be together. They
have both advantages and disadvantages. But their
mixture can bring a perfect explanation to the
understanding of financial markets

Mustafa Okur, PhD Canidate

Marmara University,Istanbul

--- Robert Horrocks <robert_horrocks@...> wrote:

> One might also mention Gary S. Becker, who could be
> described as a behavioural economist. He has shown
> how rational individual decision-making can be.
> Behavioural finance is a certainly an interesting
> subject, but I doubt that it will cause a revolution
> in economic analysis. Much has been achieved with
> the assumptions of rationality.
>
>
> Arturo Gutierrez <argujo@...> wrote:
>   Just to let you know, that at the school of
> business of the University of Chicago
> there  is one of the most active research program of
> BEHAVIORAL FINANCE and one of the most salient
> professor in the area Richard Thaler teach there.
> Martin Coady <mjohncoady@...> escribió:  I
> think I would like to hang around here for a while.
>
> When I was a college student as Texas A&M University
> about a thousand
> years ago, the Economics Department was referred to
> in some circles as
> the University of Chicago of the South. While a
> great deal of economic
> theory makes sound intellectual sense, I would
> frequently take
> exception to the assumptions underlying most
> conclusions. For example,
> individuals do not have complete knowledge of all
> aspects of an
> economic decision nor do they always operate in
> their own
> self-interest. (Always and never are words to look
> out for in any
> discipline except maybe mathematics).
>
> In any event, I was delighted to encounter a
> reference to Behavioral
> Economics in a recent article in The Economist (how
> do you turn on
> italics with this interface?) and even more pleased
> to stumble upon
> this group whose existence implies there are a lot
> of thinking folk out
> there (as opposed to those looking for a
> "scientific" justification for
> pathological behavior). Two of the ultimate products
> of old school
> economics and other supporters of unrestrained
> capitalism were
> convicted in Houston today, so I am feeling
> gratified at turns in both
> the academic and the "real" world.
>
>
>
>
>
>
>
>
>   __________________________________________________
> Correo Yahoo!
> Espacio para todos tus mensajes, antivirus y
> antispam ¡gratis!
> Regístrate ya - http://correo.espanol.yahoo.com/
>
> you may unsubscribe by sending an email to
>
> Behavioral-Finance-unsubscribe@yahoogroups.com
>
>
>
>
>
>   SPONSORED LINKS
>         Business finance course   Business to
> business finance   Small business finance
> Business finance consultant   Business finance
> magazine   Business finance schools
>
> ---------------------------------
>   YAHOO! GROUPS LINKS
>
>
>     Visit your group "Behavioral-Finance" on the
> web.
>
>     To unsubscribe from this group, send an email
> to:
>  Behavioral-Finance-unsubscribe@yahoogroups.com
>
>     Your use of Yahoo! Groups is subject to the
> Yahoo! Terms of Service.
>
>
> ---------------------------------
>
>
>
>
>
> ---------------------------------
> Yahoo! Messenger with Voice. Make PC-to-Phone Calls
> to the US (and 30+ countries) for 2¢/min or less.


__________________________________________________
Do You Yahoo!?
Tired of spam?  Yahoo! Mail has the best spam protection around
http://mail.yahoo.com

My idea in this topic is, the future of behavioral
finance and standard finance should be together. They
have both advantages and disadvantages. But their
mixture can bring a perfect explanation to the
understanding of financial markets

Mustafa Okur, PhD Canidate

Marmara University,Istanbul

--- Robert Horrocks <robert_horrocks@...> wrote:

> One might also mention Gary S. Becker, who could be
> described as a behavioural economist. He has shown
> how rational individual decision-making can be.
> Behavioural finance is a certainly an interesting
> subject, but I doubt that it will cause a revolution
> in economic analysis. Much has been achieved with
> the assumptions of rationality.
>  
>
> Arturo Gutierrez <argujo@...> wrote:
>   Just to let you know, that at the school of
> business of the University of Chicago
> there  is one of the most active research program of
> BEHAVIORAL FINANCE and one of the most salient
> professor in the area Richard Thaler teach there.
> Martin Coady <mjohncoady@...> escribió:  I
> think I would like to hang around here for a while.
>
> When I was a college student as Texas A&M University
> about a thousand
> years ago, the Economics Department was referred to
> in some circles as
> the University of Chicago of the South. While a
> great deal of economic
> theory makes sound intellectual sense, I would
> frequently take
> exception to the assumptions underlying most
> conclusions. For example,
> individuals do not have complete knowledge of all
> aspects of an
> economic decision nor do they always operate in
> their own
> self-interest. (Always and never are words to look
> out for in any
> discipline except maybe mathematics).
>
> In any event, I was delighted to encounter a
> reference to Behavioral
> Economics in a recent article in The Economist (how
> do you turn on
> italics with this interface?) and even more pleased
> to stumble upon
> this group whose existence implies there are a lot
> of thinking folk out
> there (as opposed to those looking for a
> "scientific" justification for
> pathological behavior). Two of the ultimate products
> of old school
> economics and other supporters of unrestrained
> capitalism were
> convicted in Houston today, so I am feeling
> gratified at turns in both
> the academic and the "real" world.
>
>
>
>
>
>
>
>
>   __________________________________________________
> Correo Yahoo!
> Espacio para todos tus mensajes, antivirus y
> antispam ¡gratis!
> Regístrate ya - http://correo.espanol.yahoo.com/
>
> you may unsubscribe by sending an email to
>
> Behavioral-Finance-unsubscribe@yahoogroups.com
>
>
>
>
>
>   SPONSORED LINKS
>         Business finance course   Business to
> business finance   Small business finance   
> Business finance consultant   Business finance
> magazine   Business finance schools
>    
> ---------------------------------
>   YAHOO! GROUPS LINKS
>
>    
>     Visit your group "Behavioral-Finance" on the
> web.
>    
>     To unsubscribe from this group, send an email
> to:
>  Behavioral-Finance-unsubscribe@yahoogroups.com
>    
>     Your use of Yahoo! Groups is subject to the
> Yahoo! Terms of Service.
>
>    
> ---------------------------------
>  
>
>
>
>            
> ---------------------------------
> Yahoo! Messenger with Voice. Make PC-to-Phone Calls
> to the US (and 30+ countries) for 2¢/min or less.


__________________________________________________
Do You Yahoo!?
Tired of spam?  Yahoo! Mail has the best spam protection around
http://mail.yahoo.com

__________________________________________________
Do You Yahoo!?
Tired of spam? Yahoo! Mail has the best spam protection around
http://mail.yahoo.com

Stock performance tied to ease of pronouncing company's name

Princeton, N.J. - The ease of pronouncing the name of a company and
its stock ticker symbol influences how well that stock performs in
the days immediately after its initial public offering, two Princeton
University psychologists have found.

A new study of initial public offerings (IPOs) on two major American
stock exchanges shows that people are more likely to purchase newly
offered stocks that have easily pronounced names than those that do
not, according to Princeton's Adam Alter and Danny Oppenheimer. The
effect extends to the ease with which the stock's ticker code,
generally a few letters long, can be pronounced -- indicating that,
all else being equal, a stock with the symbol BAL should outperform
one with the symbol BDL in the first few days of trading.

"This research shows that people take mental shortcuts, even when it
comes to their investments, when it would seem that they would want
to be most rational," said Oppenheimer, an assistant professor of
psychology. "These findings contribute to the notion that psychology
has a great deal to contribute to economic theory"

Oppenheimer and Alter, a graduate student in Oppenheimer's lab and
the study's lead author, will publish their work in the May 30 issue
of the journal, Proceedings of the National Academy of Sciences.

The two researchers were initially looking for a different effect
when they stumbled upon the relationship between ease of
pronounceability and performance. They asked a group of students to
estimate how well a series of fabricated stocks would perform based
only on the stocks' names.

"We gave them the list of company names and essentially asked, 'How
well do you think the stock would perform?'" Oppenheimer said. "At
the time, we were primarily interested in studying whether we could
manipulate how people interpret the feeling that information is easy
to process. We weren't trying to study markets or companies
initially; stocks were just an interesting domain of inquiry."

However, the relationship was very strong -- regardless of Alter and
Oppenheimer's attempts to manipulate students' interpretations, the
students still believed that the easily pronounceable stocks would
perform best.

When they noticed how strongly name pronounceability influenced
predictions of performance, the researchers moved beyond the lab and
investigated the relationship between the variables in two large US
stock markets--the New York Stock Exchange and the American Exchange.
The effect held in the real world: the more "fluent" a stock's name
or symbol, the more likely the stock was to perform well initially.

"We looked at intervals of a day, a week, six months and a year after
IPO," Alter said. "The effect was strongest shortly after IPO. For
example, if you started with $1,000 and invested it in companies with
the 10 most fluent names, you would earn $333 more than you would
have had you invested in the 10 with the least fluent."

Alter said the pair of scientists had been careful to address the
possibility that other factors were at play in the study.

"We thought it was possible that larger companies might both adopt
more fluent names and attract greater investment than smaller
companies," he said. "But the effect held regardless of company size.
We also showed that the effect held when we controlled for the
influence of industry, country of origin, and other factors."

Oppenheimer cautioned that while the findings might seem highly
significant to the investing public, they do not tell the whole story
about how a stock might perform after its IPO, nor are they reliable
indicators of its performance in the long run.

"Despite the implications of these findings, investors as a group
tend to correct themselves in the presence of new information about
how the markets operate," he said. "You shouldn't make changes to
your stock portfolio based on our findings. The primary contribution
of this paper is to add a piece to the jigsaw of understanding how
markets operate."

What the findings did offer, Oppenheimer said, was another piece of
evidence that markets -- and therefore the large groups of people who
invest in them -- are not the rationally-functioning entities that
some experts believe them to be.

"This is not the only factor that plays a role in stock performance,"
he said. "A number of other economic and psychological factors
undoubtedly play a role as well. This study does not argue that
psychology is more important than economics, but rather that one
cannot ignore psychological variables when constructing models of
stock performance."

                                         ###

The research was funded by the National Science Foundation.

CONTACT: Oppenheimer, (609) 258-7465, doppenhe@...

Abstract:

Predicting Short-Term Stock Fluctuations by Using Processing Fluency
Adam L. Alter and Daniel M. Oppenheimer
Three studies investigated the impact of the psychological principle
of fluency -- that people tend to prefer easily processed information
-- on short term share price movements. In both a laboratory study
and an analysis of naturalistic real world stock market data,
fluently named stocks robustly outperformed stocks with disfluent
names in the short term. For example, in one study, an initial
investment of $1000 yielded a profit of $112 more after one day of
trading for a basket of fluently named shares than for a basket of
disfluently named shares. These results imply that simple, cognitive
approaches to modeling human behavior sometimes outperform more
typical, complex alternatives.

Hello, dear members and visitors!

Here comes our 72rd month newsletter.

1) Monthly activity

Our total membership was rather stable, increasing by
about 5 (subscribers / unsubscribers balance) to reach
the 1580 mark (not including bouncing ones).

The number of messages was around 30 now totalling 7510.
Thanks to the contributors for the new information given.

My initiative to propose a discussion on a "definition of
the month" was again resultless. I will make just another
attempt try again to see if it starts to rise some interest.
Your reactions could help maintain and enhance the BF
glossary.

In our sister list, Finance-academy, membership grew a
little and reached 335+ members, not including  bouncing
ones.
http://groups.yahoo.com/group/Finance-Academy

2) Free BF resources
Free goodies at your fingertips 24/7:

* Your permanently updated BF glossary
Currently 500 keywords. Many definitions are in the form of
detailed articles.
http://perso.wanadoo.fr/pgreenfinch/bfglo/bfglo.a.htm
=> Don't forget : every glossary page gives a link to a
"quality" poll. Give your opinion, every little helps !

* Martin Sewell's academic treasure chest in BF topics,
that site is a must for students and researchers:
http://behaviouralfinance.net/

* Your behavioral stockpricer. To use it, do your homework
first. A challenge, hey ? give it a try:
http://perso.wanadoo.fr/pgreenfinch/pricer.htm

* Our group charter
http://finance.groups.yahoo.com/group/Behavioral-Finance/files/
(click BF Group charter.doc)
also available at:
http://perso.wanadoo.fr/pgreenfinch/befigrouppolicy.htm

* Access to all yahoo group's resources (polls, links and
files)
You need a *yahoo ID/profile*. To get it, click "account
info" (in the group's homepage or your "my groups" page)
and fill in the info you deem appropriate

Wishing for many quality info and debates in this new month

Peter

Hello, dear members and visitors!

Here comes our 72rd month newsletter.

1) Monthly activity

Our total membership was rather stable, increasing by
about 5 (subscribers / unsubscribers balance) to reach
the 1580 mark (not including bouncing ones).

The number of messages was around 30 now totalling 7510.
Thanks to the contributors for the new information given.

My initiative to propose a discussion on a "definition of
the month" was again resultless. I will make just another
attempt this month to see if it starts to raise some interest.
Your reactions could help maintain and enhance the BF
glossary.

In our sister list, Finance-academy, membership grew a
little and reached 335+ members, not including  bouncing
ones.
http://groups.yahoo.com/group/Finance-Academy

2) Free BF resources
Free goodies at your fingertips 24/7:

* Your permanently updated BF glossary
Currently 500 keywords. Many definitions are in the form of
detailed articles.
http://perso.wanadoo.fr/pgreenfinch/bfglo/bfglo.a.htm
=> Don't forget : every glossary page gives a link to a
"quality" poll. Give your opinion, every little helps !

* Martin Sewell's academic treasure chest in BF topics,
that site is a must for students and researchers:
http://behaviouralfinance.net/

* Your behavioral stockpricer. To use it, do your homework
first. A challenge, hey ? give it a try:
http://perso.wanadoo.fr/pgreenfinch/pricer.htm

* Our group charter
http://finance.groups.yahoo.com/group/Behavioral-Finance/files/
(click BF Group charter.doc)
also available at:
http://perso.wanadoo.fr/pgreenfinch/befigrouppolicy.htm

* Access to all yahoo group's resources (polls, links and
files)
You need a *yahoo ID/profile*. To get it, click "account
info" (in the group's homepage or your "my groups" page)
and fill in the info you deem appropriate

Wishing for many quality info and debates in this new month

Peter

At 18:43 05/06/2006 +0000, pgreenfinch wrote:
>My initiative to propose a discussion on a "definition of
>the month" was again resultless. I will make just another
>attempt this month to see if it starts to raise some interest.
>Your reactions could help maintain and enhance the BF
>glossary.

Don't be disheartened if there is no response, the only reason that
I'd not respond is if I can't find fault with the definition!

Regards

Martin