Wall Street unleashes its 'weapons of mass manipulation' on you - Market Watch
If anyone wants to handle their own investing, I suggest they learn the term BEHAVIORAL FINANCE. It is also known as behavioral econ, or quant trading, or neuro investing. It has been around awhile but as Paul Farrell points out in the article linked to above, there is a new component to the the study of investor behavioral. A component which focuses on the "irrationality" behind investor buying, holding and selling.
The science of this studying has been "dominated by psychologists studying irrational human behavior.' However, Farrell says the field is now becoming dominated by mathematicians, chiefly, "University of Chicago finance professor Richard Thaler."
In his article Farrell explains that "unlike psychologists Thaler and the quant mathematicians are not interested in WHY investors are irrational." Instead they assume ". . . . financial markets and investors are irrational and always will be" [Emphasis mine].
According to Farrell the quants-as he refers to them-want to take advantage of investors' irrationality as the market goes through its up and down cycle, through use of "sophisticated quant math programs." Only investment banks, institutional investors and wealthy individuals with the resources can afford to implement these "quant programs." And so most of us smaller investors are once again left out in the investment hinterlands.
Part II looks at "Lazy Portfolios" which are Farrell's solution to the game being rigged
If anyone wants to handle their own investing, I suggest they learn the term BEHAVIORAL FINANCE. It is also known as behavioral econ, or quant trading, or neuro investing. It has been around awhile but as Paul Farrell points out in the article linked to above, there is a new component to the the study of investor behavioral. A component which focuses on the "irrationality" behind investor buying, holding and selling.
The science of this studying has been "dominated by psychologists studying irrational human behavior.' However, Farrell says the field is now becoming dominated by mathematicians, chiefly, "University of Chicago finance professor Richard Thaler."
In his article Farrell explains that "unlike psychologists Thaler and the quant mathematicians are not interested in WHY investors are irrational." Instead they assume ". . . . financial markets and investors are irrational and always will be" [Emphasis mine].
According to Farrell the quants-as he refers to them-want to take advantage of investors' irrationality as the market goes through its up and down cycle, through use of "sophisticated quant math programs." Only investment banks, institutional investors and wealthy individuals with the resources can afford to implement these "quant programs." And so most of us smaller investors are once again left out in the investment hinterlands.
Part II looks at "Lazy Portfolios" which are Farrell's solution to the game being rigged
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