Professor Tobias Preis has led a study of the second oldest US market index and discovered that a portfolio of shares, far from being diverse and spreading risk during a time of stock market slump, start behaving the same. ... Professor Preis believes this pattern can be used to anticipate 'diversification breakdown' in share portfolios and allow investors to steer away from a major crash by spreading their investments elsewhere or 'hedge' their money.Duh. When everything goes down, everything goes down. That doesn't tell you anything. If you could use numbers to anticipate a crash, thousands of numbers-based investors and index funds would have done it already. In fact the only people who "get out early" are insiders who know why the market is about to crash. It's about to crash because those very same insiders created the crash to maximize their profits.
It could help traders avoid the major crashes that hit stock markets in 2008. Between September and December four of the five biggest daily falls in the Dow Jones hit the US stock exchange. It was part of one of the biggest stock market crashes and led to the economic recession most of the world is still suffering.Incorrect, asshole. What led to the recession was the existence of stock markets, not this particular crash of the markets. We are in a recession because the money men have stopped investing in productive activity and put all their money into abstract bets on numerical equations. Just like what you're doing, asshole. Crashes do not cause recessions; crashes are just one symptom of the underlying failure of the whole system. Even economists sometimes seem to understand this fact.
Labels: Blinded by Stats
Polistra was named after the original townsite of Manhattan (the one in Kansas). When I was growing up in Manhattan, I spent a lot of time exploring by foot, bike, and car. I discovered the ruins of an old mill along Wildcat Creek, and decided (inaccurately) that it was the remains of the original site of Polistra. Accurate or not, I've always liked the name, with its echoes of Poland (an under-appreciated friend of freedom) and stars. ==== The title icon is explained here. ==== Switchover: This 2007 entry marks a sharp change in worldview from neocon to pure populist. ===== The long illustrated story of Polistra's Dream is a time-travel fable, attempting to answer the dangerous revision of New Deal history propagated by Amity Shlaes. The Dream has 8 episodes, linked in a chain from the first. This entry explains the Shlaes connection.