>   o some better understanding

While I do not consider Behavioral Finance to be cruical breakthrough,
it was very important to show the limitations of arbitrage.  In fact,
every single investor has servere limitations and constraints that
greatly affect their actions.

----- Forwarded message from "Hughes, James J." <James.Hughes@...> ----- From: "Hughes, James J." <James.Hughes@...> Date: Mon, 25 Jun 2007 07:21:25 -0400 To: Trans-Spirit@yahoogroups.com, technoliberation@yahoogroups.com Subject: [technoliberation] Brain imaging and the rational actor myth Reply-To: technoliberation@yahoogroups.com http://www.sciam.com/article.cfm?chanId=sa013&articleId=27333871-E7F2-99DF-3A66FD19F6C2AF91&modsrc=most_popular ScientificAmerican.com June 17, 2007 The Prospects for Homo economicus A new
fMRI study debunks the myth that we are rational-utility money maximizers By Michael Shermer Imagine that your child's private school tuition bill of $20,000 is due and the only source you have for paying it is the sale of some of your stock holdings. Fortunately, you got in on the great Google godsend and purchased 100 shares at $200 each, for a total investment of $20,000, and the stock is now at $400 a share. Should you realize your net gain by selling half of your Google stock and paying off your bill? Or should you sell off that Ford stock you purchased ages ago for $40,000 at its current value of $20,000? If you are like most people (myself included), you would sell your Google stock and hang on to your Ford stock in hopes of recovering your losses. This would be the wrong strategy. Why would you sell shares in a company whose stock is on the rise, and hang on to shares in a company whose stock is on the decline? The reason, in a
phrase, is "loss aversion," and the psychology behind it does not fit the model of Homo economicus, that figurative species of human characterized by unbounded rationality in decision making. Homo economicus is extinct, felled by the new sciences of behavioral economics and neuroeconomics, which have demonstrated that we are remarkably irrational creatures. Thousands of experiments in behavioral economics since Daniel Kahneman and Amos Tversky founded the field with their seminal 1979 paper, "Prospect Theory: An Analysis of Decision under Risk," have demonstrated that most of us are highly loss averse. Specifically, most people will reject the prospect of a 50-50 probability of gaining or losing money, unless the amount to be gained is at least double the amount to be lost. That is, people feel worse about the pain of a loss than they feel better about the pleasure of a gain. Twice as badly, in fact. Thanks to functional magnetic resonance imaging
(fMRI), we now know where in the brain this effect happens. To see this science firsthand, I visited the lab of neuroscientist Russell A. Poldrack and behavioral economist Craig R. Fox at the University of California, Los Angeles, and climbed inside the cramped quarters of the magnetic tube. The MRI scanner snaps a picture of the brain every two seconds while the subject makes decisions about gambles, which are presented through goggles featuring tiny screens on which the choices are offered. Corrections for head motion are made by aligning the individual two-second images with one another; the data from all subjects are then warped together to correct for differences in brain size and shape. A statistical model is generated to show how the MRI signal should change over time in an area that has responded perfectly to the task, followed by statistical tests to compare the observed data with the perfect model, resulting in statistical maps that are then
converted into colorful pictures of brains in action. In "The Neural Basis of Loss Aversion in Decision-Making under Risk," in the January 26 Science, Poldrack, Fox and their colleagues Sabrina M. Tom and Christopher Trepel presented the results of their fMRI study, in which they offered subjects a prospect of accepting or rejecting a gamble that offered a 50-50 chance of gaining or losing money. As the potential for gains rose, they found increased activity in the mesolimbic and mesocortical dopamine systems (dopamine is a neurotransmitter substance associated with motivation and reward). As the potential for losses increased, they found decreasing activity in these same reward-sensitive areas. Interestingly, it appears that losses and gains are coded by the same brain structures-the ventromedial prefrontal cortex, associated with decision making and learning in the context of reward and punishment, and the ventral striatum, associated with
learning, motivation and reward. Individual differences in loss aversion were predicted by how much more the brain was turned off by losses than it was turned on by gains. This effect may be caused by differences in neurochemistry, which means that some of us may be hardwired to be high- or low-risk takers, translating into real-world financial prospects, both good and bad. Yahoo! Groups Links ----- End forwarded message ----- -- Eugen* Leitl <a href="http://leitl.org">leitl</a> http://leitl.org ______________________________________________________________ ICBM: 48.07100, 11.36820 http://www.ativel.com http://postbiota.org 8B29F6BE:
099D 78BA 2FD3 B014 B08A 7779 75B0 2443 8B29 F6BE _______________________________________________ neuro mailing list neuro@... http://postbiota.org/mailman/listinfo/neuro 

[ source: http://www.sciencedaily.com/releases/2007/04/070427072318.htm ]

Dopamine-related Drugs Affect Reward-seeking Behavior

Drugs that adjust dopamine levels in the brain greatly affect how
people react to success and failure, according to research presented
at the American Academy of Neurology's 59th Annual Meeting in Boston.

In a first-of-its-kind study on humans, researchers measured how
dopamine-related drugs affect the striatum, a part of the brain that
is stimulated by rewards. The study, conducted at the Wellcome Trust
Centre for Neuroimaging in London, involved 39 healthy people between
the ages of 18 and 39. Participants were divided into three groups.
One group was given levodopa, a drug that increases dopamine levels
in the brain. Another took haloperidol, a dopamine receptor blocker.
The third was given a placebo. Dopamine is a chemical naturally
produced by the body that transmits signals between nerve cells.

Researchers showed each group symbols associated with winning or
losing different amounts of money. To "win" more money, participants
had to learn through trial and error which symbols resulted in which outcomes.

The study found people who took levodopa were 95 percent more likely
to choose symbols associated with higher monetary gains than those
who took haloperidol. As a result, the levodopa group won more money,
but they did not lose less money.

"The results show dopamine drives us to get what we want, but not
avoid what we fear," said study author Mathias Pessiglione, PhD, who
now works at the Salpetriere Hospital in Paris, France.

The findings may provide a better understanding of the side effects
of dopamine-related drugs and the disorders they are used to treat,
such as Parkinson's disease and schizophrenia. "This study may
explain why dopamine depletion leads to the lack of motivation often
described in people with Parkinson's disease," said Pessiglione, "and
how dopamine replacement therapy can cause compulsive behaviors, such
as overeating and gambling addictions, in the same people."

[ source: http://www.economist.com/displaystory.cfm?story_id=9433782 ]

Money isn't everything

Jul 5th 2007
  From The Economist print edition
Men with a lot of testosterone make curious economic choices

PSYCHOLOGISTS have known for a long time that economists are wrong.
Most economists--at least, those of the classical persuasion--believe
that any financial gain, however small, is worth having. But
psychologists know this is not true. They know because of the
ultimatum game, the outcome of which is often the rejection of free money.

In this game, one player divides a pot of money between himself and
another. The other then chooses whether to accept the offer. If he
rejects it, neither player benefits. And despite the instincts of
classical economics, a stingy offer (one that is less than about a
quarter of the total) is, indeed, usually rejected. The question is, why?

One explanation of the rejectionist strategy is that human psychology
is adapted for repeated interactions rather than one-off trades. In
this case, taking a tough, if self-sacrificial, line at the beginning
pays dividends in future rounds of the game. Rejecting a stingy offer
in a one-off game is thus just a single move in a larger strategy.
And indeed, when one-off ultimatum games are played by trained
economists, who know all this, they do tend to accept stingy offers
more often than other people would. But even they have their limits.
To throw some light on why those limits exist, Terence Burnham of
Harvard University recently gathered a group of students of
microeconomics and asked them to play the ultimatum game. All of the
students he recruited were men.

Dr Burnham's research budget ran to a bunch of $40 games. When there
are many rounds in the ultimatum game, players learn to split the
money more or less equally. But Dr Burnham was interested in a game
of only one round. In this game, which the players knew in advance
was final and could thus not affect future outcomes, proposers could
choose only between offering the other player $25 (ie, more than half
the total) or $5. Responders could accept or reject the offer as
usual. Those results recorded, Dr Burnham took saliva samples from
all the students and compared the testosterone levels assessed from
those samples with decisions made in the one-round game.

As he describes in the Proceedings of the Royal Society, the
responders who rejected a low final offer had an average testosterone
level more than 50% higher than the average of those who accepted.
Five of the seven men with the highest testosterone levels in the
study rejected a $5 ultimate offer but only one of the 19 others made
the same decision.

What Dr Burnham's result supports is a much deeper rejection of the
tenets of classical economics than one based on a slight
mis-evolution of negotiating skills. It backs the idea that what
people really strive for is relative rather than absolute prosperity.
They would rather accept less themselves than see a rival get ahead.
That is likely to be particularly true in individuals with high
testosterone levels, since that hormone is correlated with social
dominance in many species.

Economists often refer to this sort of behaviour as irrational. In
fact, it is not. It is simply, as it were, differently rational. The
things that money can buy are merely means to an end--social
status--that brings desirable reproductive opportunities. If another
route brings that status more directly, money is irrelevant.

Thanks Martin

That raises a fundamental puzzle about rationality. What
is it exactly? Can we safely define what is "rational"
or "irrational"?

Certainly to define (economic) rationality as behaving
according to one's self-interest, measured in monetary
terms, is reductive. A broader definition is needed.
The broadest one might be:
"To act in a consistent way with one's preferences"

But this does not solve the puzzle, it just transforms it
into another: "Can we judge if a preference is rational
or irrational?"

As I said in the last newsletter, BF might be too focused
on what it calls "anomalies". Maybe a too normative concept
as it supposes we agree first on relevant human norms, at
least relative to financial behavior. A bit frightening,
no?

Peter

--- In Behavioral-Finance@yahoogroups.com, Martin Sewell
<M.Sewell@...> wrote:
>
> [ source: http://www.economist.com/displaystory.cfm?
story_id=9433782 ]
>
> Money isn't everything
>
> Jul 5th 2007
>  From The Economist print edition
> Men with a lot of testosterone make curious economic choices
>
> PSYCHOLOGISTS have known for a long time that economists are wrong.
> Most economists--at least, those of the classical persuasion--
believe
> that any financial gain, however small, is worth having. But
> psychologists know this is not true. They know because of the
> ultimatum game, the outcome of which is often the rejection of free
money.
>
> In this game, one player divides a pot of money between himself and
> another. The other then chooses whether to accept the offer. If he
> rejects it, neither player benefits. And despite the instincts of
> classical economics, a stingy offer (one that is less than about a
> quarter of the total) is, indeed, usually rejected. The question
is, why?
>
> One explanation of the rejectionist strategy is that human
psychology
> is adapted for repeated interactions rather than one-off trades. In
> this case, taking a tough, if self-sacrificial, line at the
beginning
> pays dividends in future rounds of the game. Rejecting a stingy
offer
> in a one-off game is thus just a single move in a larger strategy.
> And indeed, when one-off ultimatum games are played by trained
> economists, who know all this, they do tend to accept stingy offers
> more often than other people would. But even they have their
limits.
> To throw some light on why those limits exist, Terence Burnham of
> Harvard University recently gathered a group of students of
> microeconomics and asked them to play the ultimatum game. All of
the
> students he recruited were men.
>
> Dr Burnham's research budget ran to a bunch of $40 games. When
there
> are many rounds in the ultimatum game, players learn to split the
> money more or less equally. But Dr Burnham was interested in a game
> of only one round. In this game, which the players knew in advance
> was final and could thus not affect future outcomes, proposers
could
> choose only between offering the other player $25 (ie, more than
half
> the total) or $5. Responders could accept or reject the offer as
> usual. Those results recorded, Dr Burnham took saliva samples from
> all the students and compared the testosterone levels assessed from
> those samples with decisions made in the one-round game.
>
> As he describes in the Proceedings of the Royal Society, the
> responders who rejected a low final offer had an average
testosterone
> level more than 50% higher than the average of those who accepted.
> Five of the seven men with the highest testosterone levels in the
> study rejected a $5 ultimate offer but only one of the 19 others
made
> the same decision.
>
> What Dr Burnham's result supports is a much deeper rejection of the
> tenets of classical economics than one based on a slight
> mis-evolution of negotiating skills. It backs the idea that what
> people really strive for is relative rather than absolute
prosperity.
> They would rather accept less themselves than see a rival get
ahead.
> That is likely to be particularly true in individuals with high
> testosterone levels, since that hormone is correlated with social
> dominance in many species.
>
> Economists often refer to this sort of behaviour as irrational. In
> fact, it is not. It is simply, as it were, differently rational.
The
> things that money can buy are merely means to an end--social
> status--that brings desirable reproductive opportunities. If
another
> route brings that status more directly, money is irrelevant.
>

Hi, dear members and visitors!

I'm glad to send you our group's 86th month newsletter.

Just one day before the 07.07.07 numerology superstition
strikes markets and creates a positive asymmetry in the
wedding catering business cash-flow Gaussian daily
distribution curve ;-)

1) Monthly activity

We're back to the 20 monthly message production.
Reversion to the mean strikes back ;-)
The message total reaches now 7900.
Also, we got new files about members' research work.
Thanks and congratulations to all contributors

Total number of (unbouncing) members 1670 (+10).

Our sister group (Finance-Academy) membership keeps its
ground, with ca 340 unbouncing members.
http://groups.yahoo.com/group/Finance-Academy

2) Article or chapter of the month

The last topic, "the limitations of BF", did not give birth
to a debate. So better make a pause in glossary-fathered
breeding attempts ;-).
The fact is, as our new poll seems to tell, that BF research
breakthroughs are becoming rare those days.
Although BF gets more and more popular, it suffers from some
intellectual and practical stalling, Let us hope for an
aggiornamiento that would broaden its approach.
Already new grounds are explored through neurosciences, with
some interesting findings.
Thanks to our group's intelligence officers on that field,
among them Martin Sewell, who give us precious info on those
researches.

3) Our free BF resources at your fingertips 24/7:

* As said above, a brand new poll is running at
http://finance.groups.yahoo.com/group/Behavioral-Finance/polls
== Your opinion is important ! Vote massively ! Thanks ! ==

* Your permanently maintained and improved BF glossary
500+ definitions, many of them as detailed articles.
http://perso.orange.fr/pgreenfinch/bfglo/bfglo.a.htm

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

* Your behavioral stockpricer:
http://perso.orange.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.orange.fr/pgreenfinch/befigrouppolicy.htm

** Remember, you need a *yahoo ID/profile* to access all
Yahoo group's resources (polls, links and files).
To get it, click "account info" (in the group's homepage
or your "my groups" page) and fill in the info you deem
appropriate.
As I said in a last message, a lack of yahoo ID increases
the risk of spam. ID-less members are now permanently
moderated, and banned in some cases.

Wishing for interesting info and debates in this new month.
and for a nice Summer season for all of you.

Peter

Spam cancelled. No free ride OTC admitted.
Peter

A member of this forum brought up a great point - participants do not
follow expected utility.

I would completely agree with his post - most investors do not use
an "expected" utility decision process.  However, the NCET's utility
component is not a traditional expected utility model because the
NCET allows behavioral factors to directly affect the participants'
actions (imagine having an expected utility function overlaid with
biases and other factors that sway the decision process).

I based the NCET on this utility formulation for two reasons:

1)  I've been in the business long enough to know most investors do
not follow a standardized logical decision process.  But, 80% of the
financial markets' money is run by less than 20% of the
participants.  The 20% club does use logic and expectations do make
their decisions (I'm not arguing they use good logic or have the
correct expectations).  So, while most participants do not follow an
expected utility model, the participants that dominate the large
liquid markets do.

2)  The NCET directly challenges many core elements of the academia
(fundamental value, representative agents, efficient markets, etc).
In order to have a chance at getting the paper published by a
journal, I had to write the theory in a language that professors can
relate to while not "rocking the boat" too much.

Every day the market goes up or down
Every day some commodity, currency, stock goes up or down
more than others.
Often the reasons are obscure. The move is just a noise.
Or the motives are real, but the buyers or sellers will
not tell them, why should they?
Here is the challenge for commentators. They have to find
some explanation, to invent some "good story".
An artistic job.
Sometimes a bit stressful, I suppose.
But socially rewarding, people love commentators.
Peter

--- In Behavioral-Finance@yahoogroups.com, "pgreenfinch"
<pgreenfinch@...> wrote:
>
> Every day the market goes up or down
> Every day some commodity, currency, stock goes up or down
> more than others.
> Often the reasons are obscure. The move is just a noise.
> Or the motives are real, but the buyers or sellers will
> not tell them, why should they?
> Here is the challenge for commentators. They have to find
> some explanation, to invent some "good story".
> An artistic job.
> Sometimes a bit stressful, I suppose.
> But socially rewarding, people love commentators.
> Peter
>

Peter,

Perhaps you would settle for a true story instead of an invention.  I
have a wealthy friend, let's call him Cosmo, who is unschooled in
investing.  (He would never read a forum such as this.)  One day Cosmo
heard about a stock, XYZ Corp., with such great prospects that he
decided to invest $1.5 million in it.  Unfortunately, Cosmo developed
a gambling problem and lost most of his liquid assets.  While he was
still enthusiastic about XYZ, Cosmo had no choice but to sell all of
his shares.

Cosmo wanted the trade completed in one day, even though he was
selling a number of shares greater than the average daily trading
volume for the stock.  The broker put in limit sell orders at
progressively lower prices as necessary to unload the shares.
Predictably, the price dropped by 20% on that day.

The same day, I checked out the message boards for the stock.  There
were many posts speculating on what was causing all the selling
pressure.  One said that XYZ must be getting competition from an
unexpected source.  Another said that regulatory approval of XYZ's key
new product would certainly be delayed or withheld altogether.  Still
another said it was "obvious" that XYZ would be announcing a
restatement of earnings based on the discovery of misdeeds committed
by key executives.  This poster "knew all along" that XYZ's stated
earnings were puffed up (they weren't).

As someone who knew the real reason for the selling pressure, I found
all of this speculation hilarious.  The story serves as a reminder
that there is an infinite number of reasons to sell a stock (one of
the worst being that you must) but only one reason to buy (i.e., you
expect to profit).  Accordingly, insider buying has proven to be a
much better predictor that a stock will go up than insider selling is
that a stock will go down....

Cheers,

Neil

I was amused by the article when I read it.

One of the questions I have when I read of economic experiments is
the context - how realistic (relevant to what we see and do in real
life) is the arranged situation?

I'm familiar with the ultimatium game and the normal rationale of the
participants, that it is free money for both, therefore the money
should be split 50/50%.  The 60/40% vs 87.5/12.5% offer/accept
scenario is an extreme difference, but we can probably find a real
life example somewhere that is similar.

I agree that people think more in terms of seeking relative than
absolute prosperity, but I still don't know about the correct
relative weight of sociobiology rationales or cultural/social
conditioning as the best way of explaining it.

Jan

--- In Behavioral-Finance@yahoogroups.com, "pgreenfinch"
<pgreenfinch@...> wrote:
>
> Thanks Martin
>
> That raises a fundamental puzzle about rationality. What
> is it exactly? Can we safely define what is "rational"
> or "irrational"?
>
> Certainly to define (economic) rationality as behaving
> according to one's self-interest, measured in monetary
> terms, is reductive. A broader definition is needed.
> The broadest one might be:
> "To act in a consistent way with one's preferences"
>
> But this does not solve the puzzle, it just transforms it
> into another: "Can we judge if a preference is rational
> or irrational?"
>
> As I said in the last newsletter, BF might be too focused
> on what it calls "anomalies". Maybe a too normative concept
> as it supposes we agree first on relevant human norms, at
> least relative to financial behavior. A bit frightening,
> no?
>
> Peter
>
> --- In Behavioral-Finance@yahoogroups.com, Martin Sewell
> <M.Sewell@> wrote:
> >
> > [ source: http://www.economist.com/displaystory.cfm?
> story_id=9433782 ]
> >
> > Money isn't everything
> >
> > Jul 5th 2007
> >  From The Economist print edition
> > Men with a lot of testosterone make curious economic choices
> >
> > PSYCHOLOGISTS have known for a long time that economists are
wrong.
> > Most economists--at least, those of the classical persuasion--
> believe
> > that any financial gain, however small, is worth having. But
> > psychologists know this is not true. They know because of the
> > ultimatum game, the outcome of which is often the rejection of
free
> money.
> >
> > In this game, one player divides a pot of money between himself
and
> > another. The other then chooses whether to accept the offer. If
he
> > rejects it, neither player benefits. And despite the instincts of
> > classical economics, a stingy offer (one that is less than about
a
> > quarter of the total) is, indeed, usually rejected. The question
> is, why?
> >
> > One explanation of the rejectionist strategy is that human
> psychology
> > is adapted for repeated interactions rather than one-off trades.
In
> > this case, taking a tough, if self-sacrificial, line at the
> beginning
> > pays dividends in future rounds of the game. Rejecting a stingy
> offer
> > in a one-off game is thus just a single move in a larger
strategy.
> > And indeed, when one-off ultimatum games are played by trained
> > economists, who know all this, they do tend to accept stingy
offers
> > more often than other people would. But even they have their
> limits.
> > To throw some light on why those limits exist, Terence Burnham of
> > Harvard University recently gathered a group of students of
> > microeconomics and asked them to play the ultimatum game. All of
> the
> > students he recruited were men.
> >
> > Dr Burnham's research budget ran to a bunch of $40 games. When
> there
> > are many rounds in the ultimatum game, players learn to split the
> > money more or less equally. But Dr Burnham was interested in a
game
> > of only one round. In this game, which the players knew in
advance
> > was final and could thus not affect future outcomes, proposers
> could
> > choose only between offering the other player $25 (ie, more than
> half
> > the total) or $5. Responders could accept or reject the offer as
> > usual. Those results recorded, Dr Burnham took saliva samples
from
> > all the students and compared the testosterone levels assessed
from
> > those samples with decisions made in the one-round game.
> >
> > As he describes in the Proceedings of the Royal Society, the
> > responders who rejected a low final offer had an average
> testosterone
> > level more than 50% higher than the average of those who
accepted.
> > Five of the seven men with the highest testosterone levels in the
> > study rejected a $5 ultimate offer but only one of the 19 others
> made
> > the same decision.
> >
> > What Dr Burnham's result supports is a much deeper rejection of
the
> > tenets of classical economics than one based on a slight
> > mis-evolution of negotiating skills. It backs the idea that what
> > people really strive for is relative rather than absolute
> prosperity.
> > They would rather accept less themselves than see a rival get
> ahead.
> > That is likely to be particularly true in individuals with high
> > testosterone levels, since that hormone is correlated with social
> > dominance in many species.
> >
> > Economists often refer to this sort of behaviour as irrational.
In
> > fact, it is not. It is simply, as it were, differently rational.
> The
> > things that money can buy are merely means to an end--social
> > status--that brings desirable reproductive opportunities. If
> another
> > route brings that status more directly, money is irrelevant.
> >
>

*grins*  Actually, it is not difficult to imagine all kinds of reasons
to explain for a market or stock movement.  Think of astrologers and
horoscopes where they can just fill in the blanks.

I suppose it is socially rewarding to be a 'talking head' whether as a
financial news TV actor or as a churn and burn retail stockbroker.
Socially and financially rewarding!

The actual market influrnce of talking heads is limited, though,
because the people who love to listen to them are unsophisticated and
themselves do not have financial power in relation to their population.
Professional investors and sophisticated private investors ignore
talking heads or sometimes read them with contrarian intent.

Now of 'lead investors' like star money managers or Warren Buffet may
be very more significant in their market influence...

Jan


--- In Behavioral-Finance@yahoogroups.com, "pgreenfinch"
<pgreenfinch@...> wrote:
>
> Every day the market goes up or down
> Every day some commodity, currency, stock goes up or down
> more than others.
> Often the reasons are obscure. The move is just a noise.
> Or the motives are real, but the buyers or sellers will
> not tell them, why should they?
> Here is the challenge for commentators. They have to find
> some explanation, to invent some "good story".
> An artistic job.
> Sometimes a bit stressful, I suppose.
> But socially rewarding, people love commentators.
> Peter
>

Oops!  I should have added that some security analysts have sometimes
significant influence too, as well as some newsletter writers and
corporate CEOs.


--- In Behavioral-Finance@yahoogroups.com, "leif_ericssen"
<leif_ericssen@...> wrote:
>
> *grins*  Actually, it is not difficult to imagine all kinds of
reasons
> to explain for a market or stock movement.  Think of astrologers
and
> horoscopes where they can just fill in the blanks.
>
> I suppose it is socially rewarding to be a 'talking head' whether
as a
> financial news TV actor or as a churn and burn retail stockbroker.
> Socially and financially rewarding!
>
> The actual market influrnce of talking heads is limited, though,
> because the people who love to listen to them are unsophisticated
and
> themselves do not have financial power in relation to their
population.
> Professional investors and sophisticated private investors ignore
> talking heads or sometimes read them with contrarian intent.
>
> Now of 'lead investors' like star money managers or Warren Buffet
may
> be very more significant in their market influence...
>
> Jan
>
>
> --- In Behavioral-Finance@yahoogroups.com, "pgreenfinch"
> <pgreenfinch@> wrote:
> >
> > Every day the market goes up or down
> > Every day some commodity, currency, stock goes up or down
> > more than others.
> > Often the reasons are obscure. The move is just a noise.
> > Or the motives are real, but the buyers or sellers will
> > not tell them, why should they?
> > Here is the challenge for commentators. They have to find
> > some explanation, to invent some "good story".
> > An artistic job.
> > Sometimes a bit stressful, I suppose.
> > But socially rewarding, people love commentators.
> > Peter
> >
>

--- In Behavioral-Finance@yahoogroups.com, "thomas.kaufmann81"
<thomas.kaufmann81@...> wrote:
>
> Dear people
>
> I write a bachelor thesis about the topic: state of the art of the
> behavioral finance. I can find a lot of information about finding
till
> 2004, but the most recent findings in the research of this topic I
> can't find anywhere. does anybody has a good tip for me, where I
could
> find the most recent findings to this topic? I would be very
pleased,
> getting an answer of you.
> Thanks a lot
> Thomas
>

The best person to contact is Dr. Janice Dorn.  I get her mail
list.  Never saw anything like it.  She just put article in SFO mag.
Never saw trader brain like that.  Makes me want to trade many more!
What she said hit me hard because I see what I do right and wrong
now. I forget what her website is called, but she has one. Maybe
someone knows or I find out.  Good luck to you with your bachelor
work.

what happened ? long time , no message ! i have got a new research
about effects of rising prices ( in a group of goods ) in inflation
and i think that its possible one links the "beauty contest" ( in this
case ,  expected inflation rate ) to inflation , when inflation rate
is higher that the inflation that economists expect to appear ! what
do u think ?!  and is there any paper about this subject ?!

Seems to me that the beauty contest applies (sometimes)
to expected inflation-linked behaviors.

But another behavioral phenomenon might moderate this
incidence. It is the "monetary illusion" spotted by good
old Keynes, the same guy that spotted the beauty contest,
this is a small world.

I think also that behaviors differ notably when inflation
is low, just a few percent a year (here the monetary illusion
might be dominant) compared to cases of "hyperinflation"
when the beauty contest becomes dominant and ...exuberant.

There might be some threshold where behaviors mutate.
A triggering point whent the rate gets over, let us say,
the 3-5% hurdle.

Just my (inflated?) two cents.

Maybe you could ask your nearest central bank, which I'm sure
has studied those effects. Introduce yourself as a customer,
who uses its banknotes ;-)

Peter

--- In Behavioral-Finance@yahoogroups.com, "Peyman" <peyman_fn@...>
wrote:
>
> what happened ? long time , no message ! i have got a new research
> about effects of rising prices ( in a group of goods ) in inflation
> and i think that its possible one links the "beauty contest" ( in this
> case ,  expected inflation rate ) to inflation , when inflation rate
> is higher that the inflation that economists expect to appear ! what
> do u think ?!  and is there any paper about this subject ?!
>

I'm curious about the role of psychology in inflation rates and how
that interacts with volatile economics and energy costs.

Jan

--- In Behavioral-Finance@yahoogroups.com, "pgreenfinch"
<pgreenfinch@...> wrote:
>
> Seems to me that the beauty contest applies (sometimes)
> to expected inflation-linked behaviors.
>
> But another behavioral phenomenon might moderate this
> incidence. It is the "monetary illusion" spotted by good
> old Keynes, the same guy that spotted the beauty contest,
> this is a small world.
>
> I think also that behaviors differ notably when inflation
> is low, just a few percent a year (here the monetary illusion
> might be dominant) compared to cases of "hyperinflation"
> when the beauty contest becomes dominant and ...exuberant.
>
> There might be some threshold where behaviors mutate.
> A triggering point whent the rate gets over, let us say,
> the 3-5% hurdle.
>
> Just my (inflated?) two cents.
>
> Maybe you could ask your nearest central bank, which I'm sure
> has studied those effects. Introduce yourself as a customer,
> who uses its banknotes ;-)
>
> Peter
>
> --- In Behavioral-Finance@yahoogroups.com, "Peyman" <peyman_fn@>
> wrote:
> >
> > what happened ? long time , no message ! i have got a new
research
> > about effects of rising prices ( in a group of goods ) in
inflation
> > and i think that its possible one links the "beauty contest" ( in
this
> > case ,  expected inflation rate ) to inflation , when inflation
rate
> > is higher that the inflation that economists expect to appear !
what
> > do u think ?!  and is there any paper about this subject ?!
> >
>

--- In Behavioral-Finance@yahoogroups.com, "harry_kahn22"
<starsnchampagne@...> wrote:
>
> --- In Behavioral-Finance@yahoogroups.com, "thomas.kaufmann81"
> <thomas.kaufmann81@> wrote:
> >
> > Dear people
> >
> > I write a bachelor thesis about the topic: state of the art of
the
> > behavioral finance. I can find a lot of information about finding
> till
> > 2004, but the most recent findings in the research of this topic
I
> > can't find anywhere. does anybody has a good tip for me, where I
> could
> > find the most recent findings to this topic? I would be very
> pleased,
> > getting an answer of you.
> > Thanks a lot
> > Thomas
> >
>
> The best person to contact is Dr. Janice Dorn.  I get her mail
> list.  Never saw anything like it.  She just put article in SFO
mag.
> Never saw trader brain like that.  Makes me want to trade many more!
> What she said hit me hard because I see what I do right and wrong
> now. I forget what her website is called, but she has one. Maybe
> someone knows or I find out.  Good luck to you with your bachelor
> work.
>
Thank you both very much for the answers. I found the page of Dr.
Dorn and wrote her a mail... and the google.scholar is great.

thank you very much...

Thanks peter , it's a good point !

"I think also that behaviors differ notably when inflation is low,
just a few percent a year (here the monetary illusion ( might be
dominant) compared to cases of "hyperinflation" "

and another idea that comes to me :
i think beauty contest issue ( when mean is irrationall ) is more
effective when people totally have more save ( money ) than they need
. more save allows people to have irrational point of view . one can
say they are risk lover ( i mean irrational )  because the concavity
of the utility of wealth function so they take the risk of a bad
choice . but i think they are irrational because they have to take an
action ( decide how to use their money ) while they are not good
equipped ( by economic tools ) . they have to predict  indexes ( e.g.
inflation rate ) . do they think about that in a right manner ? it's
not matter "what they think" is true or false . what is more important
is "everythink that they think , will be happened" ! if they think
that we will have hyperinflation , they begin to buy everything they
can and it can cause hyperinflation ( naturally in short time ) . but
when they have no extra money they have to act more rationally !
because they have no choice . and in this way they are not influenced
by short time waves of society that influence in their indifference
curves . so im interested in  "connection between non-expected
inflation rate ( irrational part of inflation rate that economist cant
predict ) and money that saved totally in economy !" and its not a
fixed subject and i look for more variables and effects that they can
influence in this issue .

but im a theoretical economics undergraduate student and i am not
ecuipped by econometrics . i try to show a mathematical model of this
idea ! is there anyone that interested in this subject here ? i need a
partner , he/she so good equipped by econometrics that can analyze
economic data in such a good manner !

Hi.

I'd like to propose that we put our collective wisdom
and opinions to discussing the real world question of:
in light of current global economics, and behavioral
finance, where are places that people should now be
investing--and avoiding investing?

ETFs and sector funds get quite specific.  I'm in the
US and see that natural resource, natural gas, and
energy funds have done quite well (about 23% total
return YTD), and Latin America has done very well as
well (but the fund I look at for this has no Venezula
exposure).

I like global/worldwide funds, avoid things like the
US S&P 500 index fund, and still think that oil, gas,
and natural resource funds, especially those with
global exposure, are still good places to put money.

What do YOU all think? Agree? Disagree? Have other
suggestions of where to put money, or what areas to
keep money out of for the next year, based on your
thoughts and always acknowledged that it can be
fallable crystal ball??

Let's see what we think about this!

Robert Berend, JD, PhD




________________________________________________________________________________\
____
Get the Yahoo! toolbar and be alerted to new email wherever you're surfing.
http://new.toolbar.yahoo.com/toolbar/features/mail/index.php

Hi Robert.
The 64 k euros question, insn't it?
If I try to put it under the BF light, can I "frame" it
as: "What is going to be the next bubble?"

Seems that the world has been for many years bathing in
an ocean of liquidity (mostly US dollars). Seems also
that modern financial instruments make nearly everything
tradable and liquid. Well, until the liquidity doors
close: see the US subprime funds issue.

This liquidity has to find new uses all the time, a flight
from overpriced assets to find cheaper ones. Or less
overpriced ones, as overpricing might be general.
This musical chair thing seems the cause of the "bubble
rotation" we have seen for several years.

Whence my interpretation, which certainly doesnt not answer
fully your quest:

"Is there, somewhere, in a dark dusty corner of bubbleland,
any forgoten assets that investors overlooked, that
financial gurus neglected to write a convincing story about,
and that stand a chance to become the next craze?"

Unless again, the liquidity doors close.
Or unless, my cristal ball is, as you said rightly,
fallible.

Peter

--- In Behavioral-Finance@yahoogroups.com, Robert <tactile8888@...>
wrote:
>
> Hi.
>
> I'd like to propose that we put our collective wisdom
> and opinions to discussing the real world question of:
> in light of current global economics, and behavioral
> finance, where are places that people should now be
> investing--and avoiding investing?
>
> ETFs and sector funds get quite specific.  I'm in the
> US and see that natural resource, natural gas, and
> energy funds have done quite well (about 23% total
> return YTD), and Latin America has done very well as
> well (but the fund I look at for this has no Venezula
> exposure).
>
> I like global/worldwide funds, avoid things like the
> US S&P 500 index fund, and still think that oil, gas,
> and natural resource funds, especially those with
> global exposure, are still good places to put money.
>
> What do YOU all think? Agree? Disagree? Have other
> suggestions of where to put money, or what areas to
> keep money out of for the next year, based on your
> thoughts and always acknowledged that it can be
> fallable crystal ball??
>
> Let's see what we think about this!
>
> Robert Berend, JD, PhD
>
>
>
>
>
______________________________________________________________________
______________
> Get the Yahoo! toolbar and be alerted to new email wherever you're
surfing.
> http://new.toolbar.yahoo.com/toolbar/features/mail/index.php
>

Hi Peter.

Nice to hear from you.

Phrasing it as "a dusty corner of bubbleland" is a bit
of a spin on what I'm trying to get the group mind's
view of.

I think that investing in natural resources is still a
good area, even though it has had strong appreciation
for several years...gas, chemicals, etc.  And defense
as well!! (Bush and Congress---and other
countries--have an insatiable need for those things.)

I don't think the subprime market will have much
effect---the real estate bust was obvious as I believe
in cycles of everything (and also knowing real estate
investing too).

I'm wondering what people think are good areas to
invest in now---and what are areas that people think
might be heading down in the next year or so.

I'd prefer the straight out question with the BF spin
on top.
Where are the summer doldrums of the US market this
year?
What about next year being a presidential year?
What if the black swan of OPEC going to Euros happens?

Let's move some wisdom from theory to actual practical
"here's what I think are good and bad places to invest
for the next year or so."

Thanks.
Robert Berend


--- pgreenfinch <pgreenfinch@...> wrote:

> Hi Robert.
> The 64 k euros question, insn't it?
> If I try to put it under the BF light, can I "frame"
> it
> as: "What is going to be the next bubble?"
>
> Seems that the world has been for many years bathing
> in
> an ocean of liquidity (mostly US dollars). Seems
> also
> that modern financial instruments make nearly
> everything
> tradable and liquid. Well, until the liquidity doors
>
> close: see the US subprime funds issue.
>
> This liquidity has to find new uses all the time, a
> flight
> from overpriced assets to find cheaper ones. Or less
>
> overpriced ones, as overpricing might be general.
> This musical chair thing seems the cause of the
> "bubble
> rotation" we have seen for several years.
>
> Whence my interpretation, which certainly doesnt not
> answer
> fully your quest:
>
> "Is there, somewhere, in a dark dusty corner of
> bubbleland,
> any forgoten assets that investors overlooked, that
> financial gurus neglected to write a convincing
> story about,
> and that stand a chance to become the next craze?"
>
> Unless again, the liquidity doors close.
> Or unless, my cristal ball is, as you said rightly,
> fallible.
>
> Peter
>
> --- In Behavioral-Finance@yahoogroups.com, Robert
> <tactile8888@...>
> wrote:
> >
> > Hi.
> >
> > I'd like to propose that we put our collective
> wisdom
> > and opinions to discussing the real world question
> of:
> > in light of current global economics, and
> behavioral
> > finance, where are places that people should now
> be
> > investing--and avoiding investing?
> >
> > ETFs and sector funds get quite specific.  I'm in
> the
> > US and see that natural resource, natural gas, and
> > energy funds have done quite well (about 23% total
> > return YTD), and Latin America has done very well
> as
> > well (but the fund I look at for this has no
> Venezula
> > exposure).
> >
> > I like global/worldwide funds, avoid things like
> the
> > US S&P 500 index fund, and still think that oil,
> gas,
> > and natural resource funds, especially those with
> > global exposure, are still good places to put
> money.
> >
> > What do YOU all think? Agree? Disagree? Have other
> > suggestions of where to put money, or what areas
> to
> > keep money out of for the next year, based on your
> > thoughts and always acknowledged that it can be
> > fallable crystal ball??
> >
> > Let's see what we think about this!
> >
> > Robert Berend, JD, PhD
> >
> >
> >
> >
> >
>
______________________________________________________________________
> ______________
> > Get the Yahoo! toolbar and be alerted to new email
> wherever you're
> surfing.
> >
>
http://new.toolbar.yahoo.com/toolbar/features/mail/index.php
> >
>
>
>




________________________________________________________________________________\
____
Looking for a deal? Find great prices on flights and hotels with Yahoo!
FareChase.
http://farechase.yahoo.com/

At 05:21 11/07/2007 +0000, harry_kahn22 wrote:
>The best person to contact is Dr. Janice Dorn.

No she is not, her work is utter nonsense.

Martin

I believe that is called the Bubble Bath Hypothesis, Peter? ;)

Jan

--- In Behavioral-Finance@yahoogroups.com, "pgreenfinch"
<pgreenfinch@...> wrote:
>
> Hi Robert.
> The 64 k euros question, insn't it?
> If I try to put it under the BF light, can I "frame" it
> as: "What is going to be the next bubble?"
>
> Seems that the world has been for many years bathing in
> an ocean of liquidity (mostly US dollars). Seems also
> that modern financial instruments make nearly everything
> tradable and liquid. Well, until the liquidity doors
> close: see the US subprime funds issue.
>
> This liquidity has to find new uses all the time, a flight
> from overpriced assets to find cheaper ones. Or less
> overpriced ones, as overpricing might be general.
> This musical chair thing seems the cause of the "bubble
> rotation" we have seen for several years.
>
> Whence my interpretation, which certainly doesnt not answer
> fully your quest:
>
> "Is there, somewhere, in a dark dusty corner of bubbleland,
> any forgoten assets that investors overlooked, that
> financial gurus neglected to write a convincing story about,
> and that stand a chance to become the next craze?"
>
> Unless again, the liquidity doors close.
> Or unless, my cristal ball is, as you said rightly,
> fallible.
>
> Peter
>
> --- In Behavioral-Finance@yahoogroups.com, Robert <tactile8888@>
> wrote:
> >
> > Hi.
> >
> > I'd like to propose that we put our collective wisdom
> > and opinions to discussing the real world question of:
> > in light of current global economics, and behavioral
> > finance, where are places that people should now be
> > investing--and avoiding investing?
> >
> > ETFs and sector funds get quite specific.  I'm in the
> > US and see that natural resource, natural gas, and
> > energy funds have done quite well (about 23% total
> > return YTD), and Latin America has done very well as
> > well (but the fund I look at for this has no Venezula
> > exposure).
> >
> > I like global/worldwide funds, avoid things like the
> > US S&P 500 index fund, and still think that oil, gas,
> > and natural resource funds, especially those with
> > global exposure, are still good places to put money.
> >
> > What do YOU all think? Agree? Disagree? Have other
> > suggestions of where to put money, or what areas to
> > keep money out of for the next year, based on your
> > thoughts and always acknowledged that it can be
> > fallable crystal ball??
> >
> > Let's see what we think about this!
> >
> > Robert Berend, JD, PhD
> >
> >
> >
> >
> >
>
______________________________________________________________________
> ______________
> > Get the Yahoo! toolbar and be alerted to new email wherever
you're
> surfing.
> > http://new.toolbar.yahoo.com/toolbar/features/mail/index.php
> >
>

Hi Robert,

You may want to be aware that Behavioural Finance is a specialised
discipline in academia. Some of the members here are researchers at
university, some are in the financial sector including hedge funds,
and some are private investors.

As you might imagine, others are and have been applying BF to their
investment thinking for years. I know that some hang out at
seekingalpha.com

Jan

--- In Behavioral-Finance@yahoogroups.com, Robert <tactile8888@...>
wrote:
>
> Hi Peter.
>
> Nice to hear from you.
>
> Phrasing it as "a dusty corner of bubbleland" is a bit
> of a spin on what I'm trying to get the group mind's
> view of.
>
> I think that investing in natural resources is still a
> good area, even though it has had strong appreciation
> for several years...gas, chemicals, etc.  And defense
> as well!! (Bush and Congress---and other
> countries--have an insatiable need for those things.)
>
> I don't think the subprime market will have much
> effect---the real estate bust was obvious as I believe
> in cycles of everything (and also knowing real estate
> investing too).
>
> I'm wondering what people think are good areas to
> invest in now---and what are areas that people think
> might be heading down in the next year or so.
>
> I'd prefer the straight out question with the BF spin
> on top.
> Where are the summer doldrums of the US market this
> year?
> What about next year being a presidential year?
> What if the black swan of OPEC going to Euros happens?
>
> Let's move some wisdom from theory to actual practical
> "here's what I think are good and bad places to invest
> for the next year or so."
>
> Thanks.
> Robert Berend
>
>
> --- pgreenfinch <pgreenfinch@...> wrote:
>
> > Hi Robert.
> > The 64 k euros question, insn't it?
> > If I try to put it under the BF light, can I "frame"
> > it
> > as: "What is going to be the next bubble?"
> >
> > Seems that the world has been for many years bathing
> > in
> > an ocean of liquidity (mostly US dollars). Seems
> > also
> > that modern financial instruments make nearly
> > everything
> > tradable and liquid. Well, until the liquidity doors
> >
> > close: see the US subprime funds issue.
> >
> > This liquidity has to find new uses all the time, a
> > flight
> > from overpriced assets to find cheaper ones. Or less
> >
> > overpriced ones, as overpricing might be general.
> > This musical chair thing seems the cause of the
> > "bubble
> > rotation" we have seen for several years.
> >
> > Whence my interpretation, which certainly doesnt not
> > answer
> > fully your quest:
> >
> > "Is there, somewhere, in a dark dusty corner of
> > bubbleland,
> > any forgoten assets that investors overlooked, that
> > financial gurus neglected to write a convincing
> > story about,
> > and that stand a chance to become the next craze?"
> >
> > Unless again, the liquidity doors close.
> > Or unless, my cristal ball is, as you said rightly,
> > fallible.
> >
> > Peter
> >
> > --- In Behavioral-Finance@yahoogroups.com, Robert
> > <tactile8888@>
> > wrote:
> > >
> > > Hi.
> > >
> > > I'd like to propose that we put our collective
> > wisdom
> > > and opinions to discussing the real world question
> > of:
> > > in light of current global economics, and
> > behavioral
> > > finance, where are places that people should now
> > be
> > > investing--and avoiding investing?
> > >
> > > ETFs and sector funds get quite specific.  I'm in
> > the
> > > US and see that natural resource, natural gas, and
> > > energy funds have done quite well (about 23% total
> > > return YTD), and Latin America has done very well
> > as
> > > well (but the fund I look at for this has no
> > Venezula
> > > exposure).
> > >
> > > I like global/worldwide funds, avoid things like
> > the
> > > US S&P 500 index fund, and still think that oil,
> > gas,
> > > and natural resource funds, especially those with
> > > global exposure, are still good places to put
> > money.
> > >
> > > What do YOU all think? Agree? Disagree? Have other
> > > suggestions of where to put money, or what areas
> > to
> > > keep money out of for the next year, based on your
> > > thoughts and always acknowledged that it can be
> > > fallable crystal ball??
> > >
> > > Let's see what we think about this!
> > >
> > > Robert Berend, JD, PhD
> > >
> > >
> > >
> > >
> > >
> >
>
______________________________________________________________________
> > ______________
> > > Get the Yahoo! toolbar and be alerted to new email
> > wherever you're
> > surfing.
> > >
> >
> http://new.toolbar.yahoo.com/toolbar/features/mail/index.php
> > >
> >
> >
> >
>
>
>
>
>
______________________________________________________________________
______________
> Looking for a deal? Find great prices on flights and hotels with
Yahoo! FareChase.
> http://farechase.yahoo.com/
>

I agree that natural resources can still be good
investments. But I have observed that when oil prices
surged in the past years, oil stocks tend to lag well
behind. As a result, if we do the math, we can buy
crude oil at around $50/bbl by acqiring some oil
companies when the market price for crude oil is
around $70/bbl.

Similar thing happened for real estate market and real
estate stocks in some parts of the world, as the
latter tends to lag well behind the former in a bull
run.

It appears to me that investors tend to be more keen
on buying condo units in time of boom than buying the
companies that build condo.

Is there any BF literature to explain the above?

K.C.

--- leif_ericssen <leif_ericssen@...> wrote:

> Hi Robert,
>
> You may want to be aware that Behavioural Finance is
> a specialised
> discipline in academia. Some of the members here are
> researchers at
> university, some are in the financial sector
> including hedge funds,
> and some are private investors.
>
> As you might imagine, others are and have been
> applying BF to their
> investment thinking for years. I know that some hang
> out at
> seekingalpha.com
>
> Jan
>
> --- In Behavioral-Finance@yahoogroups.com, Robert
> <tactile8888@...>
> wrote:
> >
> > Hi Peter.
> >
> > Nice to hear from you.
> >
> > Phrasing it as "a dusty corner of bubbleland" is a
> bit
> > of a spin on what I'm trying to get the group
> mind's
> > view of.
> >
> > I think that investing in natural resources is
> still a
> > good area, even though it has had strong
> appreciation
> > for several years...gas, chemicals, etc.  And
> defense
> > as well!! (Bush and Congress---and other
> > countries--have an insatiable need for those
> things.)
> >
> > I don't think the subprime market will have much
> > effect---the real estate bust was obvious as I
> believe
> > in cycles of everything (and also knowing real
> estate
> > investing too).
> >
> > I'm wondering what people think are good areas to
> > invest in now---and what are areas that people
> think
> > might be heading down in the next year or so.
> >
> > I'd prefer the straight out question with the BF
> spin
> > on top.
> > Where are the summer doldrums of the US market
> this
> > year?
> > What about next year being a presidential year?
> > What if the black swan of OPEC going to Euros
> happens?
> >
> > Let's move some wisdom from theory to actual
> practical
> > "here's what I think are good and bad places to
> invest
> > for the next year or so."
> >
> > Thanks.
> > Robert Berend
> >
> >
> > --- pgreenfinch <pgreenfinch@...> wrote:
> >
> > > Hi Robert.
> > > The 64 k euros question, insn't it?
> > > If I try to put it under the BF light, can I
> "frame"
> > > it
> > > as: "What is going to be the next bubble?"
> > >
> > > Seems that the world has been for many years
> bathing
> > > in
> > > an ocean of liquidity (mostly US dollars). Seems
> > > also
> > > that modern financial instruments make nearly
> > > everything
> > > tradable and liquid. Well, until the liquidity
> doors
> > >
> > > close: see the US subprime funds issue.
> > >
> > > This liquidity has to find new uses all the
> time, a
> > > flight
> > > from overpriced assets to find cheaper ones. Or
> less
> > >
> > > overpriced ones, as overpricing might be
> general.
> > > This musical chair thing seems the cause of the
> > > "bubble
> > > rotation" we have seen for several years.
> > >
> > > Whence my interpretation, which certainly doesnt
> not
> > > answer
> > > fully your quest:
> > >
> > > "Is there, somewhere, in a dark dusty corner of
> > > bubbleland,
> > > any forgoten assets that investors overlooked,
> that
> > > financial gurus neglected to write a convincing
> > > story about,
> > > and that stand a chance to become the next
> craze?"
> > >
> > > Unless again, the liquidity doors close.
> > > Or unless, my cristal ball is, as you said
> rightly,
> > > fallible.
> > >
> > > Peter
> > >
> > > --- In Behavioral-Finance@yahoogroups.com,
> Robert
> > > <tactile8888@>
> > > wrote:
> > > >
> > > > Hi.
> > > >
> > > > I'd like to propose that we put our collective
> > > wisdom
> > > > and opinions to discussing the real world
> question
> > > of:
> > > > in light of current global economics, and
> > > behavioral
> > > > finance, where are places that people should
> now
> > > be
> > > > investing--and avoiding investing?
> > > >
> > > > ETFs and sector funds get quite specific.  I'm
> in
> > > the
> > > > US and see that natural resource, natural gas,
> and
> > > > energy funds have done quite well (about 23%
> total
> > > > return YTD), and Latin America has done very
> well
> > > as
> > > > well (but the fund I look at for this has no
> > > Venezula
> > > > exposure).
> > > >
> > > > I like global/worldwide funds, avoid things
> like
> > > the
> > > > US S&P 500 index fund, and still think that
> oil,
> > > gas,
> > > > and natural resource funds, especially those
> with
> > > > global exposure, are still good places to put
> > > money.
> > > >
> > > > What do YOU all think? Agree? Disagree? Have
> other
> > > > suggestions of where to put money, or what
> areas
> > > to
> > > > keep money out of for the next year, based on
> your
> > > > thoughts and always acknowledged that it can
> be
> > > > fallable crystal ball??
> > > >
> > > > Let's see what we think about this!
> > > >
> > > > Robert Berend, JD, PhD
> > > >
> > > >
> > > >
> > > >
> > > >
> > >
> >
>
______________________________________________________________________
> > > ______________
> > > > Get the Yahoo! toolbar and be alerted to new
> email
> > > wherever you're
> > > surfing.
> > > >
> > >
>
=== message truncated ===

-----Original Message-----
From: Behavioral-Finance@yahoogroups.com [mailto:Behavioral-Finance@yahoogroups.com]On Behalf Of Kwok Yeung
Sent: Wednesday, July 25, 2007 12:33 PM
To: Behavioral-Finance@yahoogroups.com
Subject: Re: [Behavioral-Finance] Re: Let's talk real world BF...

I agree that natural resources can still be good
investments. But I have observed that when oil prices
surged in the past years, oil stocks tend to lag well
behind. As a result, if we do the math, we can buy
crude oil at around $50/bbl by acqiring some oil
companies when the market price for crude oil is
around $70/bbl.

Similar thing happened for real estate market and real
estate stocks in some parts of the world, as the
latter tends to lag well behind the former in a bull
run.

It appears to me that investors tend to be more keen
on buying condo units in time of boom than buying the
companies that build condo.

Is there any BF literature to explain the above?

K.C.

--- leif_ericssen <leif_ericssen@yahoo.com> wrote:

> Hi Robert,
>
> You may want to be aware that Behavioural Finance is
> a specialised
> discipline in academia. Some of the members here are
> researchers at
> university, some are in the financial sector
> including hedge funds,
> and some are private investors.
>
> As you might imagine, others are and have been
> applying BF to their
> investment thinking for years. I know that some hang
> out at
> seekingalpha.com
>
> Jan
>
> --- In Behavioral-Finance@yahoogroups.com, Robert
> <tactile8888@...>
> wrote:
> >
> > Hi Peter.
> >
> > Nice to hear from you.
> >
> > Phrasing it as "a dusty corner of bubbleland" is a
> bit
> > of a spin on what I'm trying to get the group
> mind's
> > view of.
> >
> > I think that investing in natural resources is
> still a
> > good area, even though it has had strong
> appreciation
> > for several years...gas, chemicals, etc. And
> defense
> > as well!! (Bush and Congress---and other
> > countries--have an insatiable need for those
> things.)
> >
> > I don't think the subprime market will have much
> > effect---the real estate bust was obvious as I
> believe
> > in cycles of everything (and also knowing real
> estate
> > investing too).
> >
> > I'm wondering what people think are good areas to
> > invest in now---and what are areas that people
> think
> > might be heading down in the next year or so.
> >
> > I'd prefer the straight out question with the BF
> spin
> > on top.
> > Where are the summer doldrums of the US market
> this
> > year?
> > What about next year being a presidential year?
> > What if the black swan of OPEC going to Euros
> happens?
> >
> > Let's move some wisdom from theory to actual
> practical
> > "here's what I think are good and bad places to
> invest
> > for the next year or so."
> >
> > Thanks.
> > Robert Berend
> >
> >
> > --- pgreenfinch <pgreenfinch@...> wrote:
> >
> > > Hi Robert.
> > > The 64 k euros question, insn't it?
> > > If I try to put it under the BF light, can I
> "frame"
> > > it
> > > as: "What is going to be the next bubble?"
> > >
> > > Seems that the world has been for many years
> bathing
> > > in
> > > an ocean of liquidity (mostly US dollars). Seems
> > > also
> > > that modern financial instruments make nearly
> > > everything
> > > tradable and liquid. Well, until the liquidity
> doors
> > >
> > > close: see the US subprime funds issue.
> > >
> > > This liquidity has to find new uses all the
> time, a
> > > flight
> > > from overpriced assets to find cheaper ones. Or
> less
> > >
> > > overpriced ones, as overpricing might be
> general.
> > > This musical chair thing seems the cause of the
> > > "bubble
> > > rotation" we have seen for several years.
> > >
> > > Whence my interpretation, which certainly doesnt
> not
> > > answer
> > > fully your quest:
> > >
> > > "Is there, somewhere, in a dark dusty corner of
> > > bubbleland,
> > > any forgoten assets that investors overlooked,
> that
> > > financial gurus neglected to write a convincing
> > > story about,
> > > and that stand a chance to become the next
> craze?"
> > >
> > > Unless again, the liquidity doors close.
> > > Or unless, my cristal ball is, as you said
> rightly,
> > > fallible.
> > >
> > > Peter
> > >
> > > --- In Behavioral-Finance@yahoogroups.com,
> Robert
> > > <tactile8888@>
> > > wrote:
> > > >
> > > > Hi.
> > > >
> > > > I'd like to propose that we put our collective
> > > wisdom
> > > > and opinions to discussing the real world
> question
> > > of:
> > > > in light of current global economics, and
> > > behavioral
> > > > finance, where are places that people should
> now
> > > be
> > > > investing--and avoiding investing?
> > > >
> > > > ETFs and sector funds get quite specific. I'm
> in
> > > the
> > > > US and see that natural resource, natural gas,
> and
> > > > energy funds have done quite well (about 23%
> total
> > > > return YTD), and Latin America has done very
> well
> > > as
> > > > well (but the fund I look at for this has no
> > > Venezula
> > > > exposure).
> > > >
> > > > I like global/worldwide funds, avoid things
> like
> > > the
> > > > US S&P 500 index fund, and still think that
> oil,
> > > gas,
> > > > and natural resource funds, especially those
> with
> > > > global exposure, are still good places to put
> > > money.
> > > >
> > > > What do YOU all think? Agree? Disagree? Have
> other
> > > > suggestions of where to put money, or what
> areas
> > > to
> > > > keep money out of for the next year, based on
> your
> > > > thoughts and always acknowledged that it can
> be
> > > > fallable crystal ball??
> > > >
> > > > Let's see what we think about this!
> > > >
> > > > Robert Berend, JD, PhD
> > > >
> > > >
> > > >
> > > >
> > > >
> > >
> >
>
__________________________________________________________
> > > ______________
> > > > Get the Yahoo! toolbar and be alerted to new
> email
> > > wherever you're
> > > surfing.
> > > >
> > >
>
=== message truncated ===

A informacao transmitida destina-se apenas a pessoa ou entidade a quem foi enderecada e pode conter informacao confidencial, legalmente protegida e para conhecimento exclusivo do destinatario. Se o leitor desta advertencia nao for o seu destinatario, fica ciente de que sua leitura, divulgacao, distribuicao ou copia, e estritamente proibida. Caso a mensagem tenha sido recebida por engano, favor comunicar ao remetente e apagar o texto do computador. The information transmitted is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission. dissemination or other use of, or taking of any action in reliance upon this information by persons or entities other than the intended recipient is prohibited. If you received this in error, please contact the sender and delete the material from any computer.

I hear about regression to the mean on prices---but
I've never seen it with real estate over the long
haul.

The price your parents paid for the house you were
raised in is worth one or two--or more--zeros now than
it was then.  Scarcity of real estate and all that.

When there was a RE bubble burst in Beverly Hills in
1990 or so, a $4M house was marked down to
2Million...but now it's probably worth 8 million.

Robert (originally from LA, and knowing that Beverly
Hills is not Ohio.)


--- Rodrigo Donato <rdonato@...> wrote:

> Hi KC,
>
> You are right saying that oil stocks lag oil prices
> sometimes, but it is particularly true when we have
> any problem related to supply, so the long term
> prices are lower than spot ones, I mean a
> backwardation structure in the futures contracts.
> When we have a steepening upward in this futures
> contracts structure it´s more related to a general
> increase in the demand, in this case oil stock
> usually leads the way. The same could be interpreted
> to the housing sector, prices skyrocket during mania
> periods, but in the long run supply meets demand
> rebalancing prices. So valuate real state stocks
> must take in count some price mean reversion.
>
> Rgds
>
> -----Original Message-----
> From: Behavioral-Finance@yahoogroups.com
> [mailto:Behavioral-Finance@yahoogroups.com]On Behalf
> Of Kwok Yeung
> Sent: Wednesday, July 25, 2007 12:33 PM
> To: Behavioral-Finance@yahoogroups.com
> Subject: Re: [Behavioral-Finance] Re: Let's talk
> real world BF...
>
>
>
> I agree that natural resources can still be good
> investments. But I have observed that when oil
> prices
> surged in the past years, oil stocks tend to lag
> well
> behind. As a result, if we do the math, we can buy
> crude oil at around $50/bbl by acqiring some oil
> companies when the market price for crude oil is
> around $70/bbl.
>
> Similar thing happened for real estate market and
> real
> estate stocks in some parts of the world, as the
> latter tends to lag well behind the former in a bull
> run.
>
> It appears to me that investors tend to be more keen
> on buying condo units in time of boom than buying
> the
> companies that build condo.
>
> Is there any BF literature to explain the above?
>
> K.C.
>
> --- leif_ericssen < leif_ericssen@
> <mailto:leif_ericssen%40yahoo.com> yahoo.com> wrote:
>
> > Hi Robert,
> >
> > You may want to be aware that Behavioural Finance
> is
> > a specialised
> > discipline in academia. Some of the members here
> are
> > researchers at
> > university, some are in the financial sector
> > including hedge funds,
> > and some are private investors.
> >
> > As you might imagine, others are and have been
> > applying BF to their
> > investment thinking for years. I know that some
> hang
> > out at
> > seekingalpha.com
> >
> > Jan
> >
> > --- In Behavioral-Finance@
> <mailto:Behavioral-Finance%40yahoogroups.com>
> yahoogroups.com, Robert
> > <tactile8888@...>
> > wrote:
> > >
> > > Hi Peter.
> > >
> > > Nice to hear from you.
> > >
> > > Phrasing it as "a dusty corner of bubbleland" is
> a
> > bit
> > > of a spin on what I'm trying to get the group
> > mind's
> > > view of.
> > >
> > > I think that investing in natural resources is
> > still a
> > > good area, even though it has had strong
> > appreciation
> > > for several years...gas, chemicals, etc. And
> > defense
> > > as well!! (Bush and Congress---and other
> > > countries--have an insatiable need for those
> > things.)
> > >
> > > I don't think the subprime market will have much
> > > effect---the real estate bust was obvious as I
> > believe
> > > in cycles of everything (and also knowing real
> > estate
> > > investing too).
> > >
> > > I'm wondering what people think are good areas
> to
> > > invest in now---and what are areas that people
> > think
> > > might be heading down in the next year or so.
> > >
> > > I'd prefer the straight out question with the BF
> > spin
> > > on top.
> > > Where are the summer doldrums of the US market
> > this
> > > year?
> > > What about next year being a presidential year?
> > > What if the black swan of OPEC going to Euros
> > happens?
> > >
> > > Let's move some wisdom from theory to actual
> > practical
> > > "here's what I think are good and bad places to
> > invest
> > > for the next year or so."
> > >
> > > Thanks.
> > > Robert Berend
> > >
> > >
> > > --- pgreenfinch <pgreenfinch@...> wrote:
> > >
> > > > Hi Robert.
> > > > The 64 k euros question, insn't it?
> > > > If I try to put it under the BF light, can I
> > "frame"
> > > > it
> > > > as: "What is going to be the next bubble?"
> > > >
> > > > Seems that the world has been for many years
> > bathing
> > > > in
> > > > an ocean of liquidity (mostly US dollars).
> Seems
> > > > also
> > > > that modern financial instruments make nearly
> > > > everything
> > > > tradable and liquid. Well, until the liquidity
> > doors
> > > >
> > > > close: see the US subprime funds issue.
> > > >
> > > > This liquidity has to find new uses all the
> > time, a
> > > > flight
> > > > from overpriced assets to find cheaper ones.
> Or
> > less
> > > >
> > > > overpriced ones, as overpricing might be
> > general.
> > > > This musical chair thing seems the cause of
> the
> > > > "bubble
> > > > rotation" we have seen for several years.
> > > >
> > > > Whence my interpretation, which certainly
> doesnt
> > not
> > > > answer
> > > > fully your quest:
> > > >
> > > > "Is there, somewhere, in a dark dusty corner
> of
> > > > bubbleland,
> > > > any forgoten assets that investors overlooked,
> > that
> > > > financial gurus neglected to write a
> convincing
> > > > story about,
> > > > and that stand a chance to become the next
> > craze?"
> > > >
> > > > Unless again, the liquidity doors close.
> > > > Or unless, my cristal ball is, as you said
> > rightly,
> > > > fallible.
> > > >
> > > > Peter
> > > >
> > > > --- In Behavioral-Finance@
> <mailto:Behavioral-Finance%40yahoogroups.com>
> yahoogroups.com,
>
=== message truncated ===




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