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投影片1 Describes the financial instruments traded in primary and secondary markets.

Discusses Market indexes. Discusses options and futures.

投影片2 A more in depth look at EMH and its implications.

Idea: Securities are fairly priced and one cannot expect to consistently outperform the

market.

投影片5 Oerconfidence is experience based. !ote extrapolation bias is a form of oerconfidence.

投影片6 "ook calls this #conseratism#

投影片7 $ots of other examples possible here.

投影片10 %rospect theory is an example of loss aersion. &o the left of 'ero in %anel " an inestor is

in the domain of losses and becomes risk seekin(. In other )ords* if you think you are

(oin( to take a loss* you are more likely to take a risk in hopes of aoidin( the loss* een if 

it is not a (ood (amble. I hae conducted a test in class that demonstrates people do

exhibit loss aersion.

投影片12 A lot of arbitra(e is not pure arbitra(e its risky arbitra(e

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投影片13 In +,- /oyal Dutch %etroleum mer(ed )ith Shell &ransport* althou(h their stock

continued to trade separately. 0nder the mer(er a(reement /D receies 1-2 of the profits

of the 3oint company and S& receies 4-2. Hence the ratio of the share price of /D5S&

should be 1-54- or +.6. &he price has deiated from this parity leel for extended periods

of time.

7ou can find similar eidence in e8uity care outs and perhaps in closed end fund

discounts and premiums* althou(h both of these may hae other explanations.

/emember 9eynes 8uote* ;Markets can remain irrational lon(er than you can remain

solent.< =hat if prices dont conform to your models in the near term> &his can be

disastrous if you are leered. 0ltimately this is )hy $on( &erm ?apital Mana(ement

Hed(e @und failed. In the lon( run their bets )ere correct* but the markets did not return

to normal leels immediately and the funds hu(e amount of leera(e forced it under.

投影片14 It seems to me that most of the behaioral problems stem from a lack of trainin( in

economics. Many of them derie from oerreliance on historical or statistical data rather

than understandin( the underlyin( economics of a (ien inestment. At a minimum bein(

a)are of these potential pitfalls in decision makin( should help inestors aoid such

errors.

投影片16 &he so called disposition effect may help explain the first &A belief. 0nder the

disposition effect inestors exhibit loss aersion so that they are reluctant to sell on bad

ne)s and price coner(es slo)ly to its ne) fundamental alue. =hile some inestorsundoubtedly behae this )ay* this seems unlikely to be a true description of market prices.

投影片17 &he sin(le asterisks in &able ,.+ mark an eent resultin( in the placement of a ne) B or O

in the chart. &he da((ers denote price moements that result in tie start of a ne) column of 

Bs or Os.

Sell si(nals are (enerated )hen the stock price penetrates preious lo)s* and buy si(nals

occur )hen preious hi(h prices are penetrated A. leels and are indicated in @i(ure ,.1*

)hich is an actual chart for Atlantic /ichfield.

投影片18 &he sin(le asterisks in &able ,.+ mark an eent resultin( in the placement of a ne) B or O

in the chart. &he da((ers denote price moements that result in tie start of a ne) column of 

Bs or Os.

投影片19 &he sin(le asterisks in &able ,.+ mark an eent resultin( in the placement of a ne) B or O

in the chart. &he da((ers denote price moements that result in tie start of a ne) column of 

Bs or Os.

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投影片22 C &rends: %rimary: Months or years* Intermediate* Daily to =eekly* maybe a month* Minor 

is mostly intraday and can be i(nored.

投影片26 &his index can be found in the =all Street ?ourier Online

投影片27 ?ould be bullish on the coers later

投影片30 One on the left is real* the one on the ri(ht is simulated.