Wednesday, May 17, 2006
Phase transition
Physicsts apply their mathematical tools to equities markets, and critical phenomenon is observed in financial markets. In short, the stock market has inherent characteristics that will generate crashes, and scale invariant variable can be found before a carsh.
http://www.p.u-tokyo.ac.jp/~yamamoto/papers/prl07.pdf
Also, when markets that are supposed to be negative correlated start to move in the same direction, that's also a signal for critical phenomenon i.e. time to stay away.
My action plan :
Take profit and reduce my exposure to the gold market and emerging markets.
http://www.p.u-tokyo.ac.jp/~yamamoto/papers/prl07.pdf
Also, when markets that are supposed to be negative correlated start to move in the same direction, that's also a signal for critical phenomenon i.e. time to stay away.
My action plan :
Take profit and reduce my exposure to the gold market and emerging markets.
# posted by Lobo @ 7:11 AM 
