Today’s financial markets can get better, but it won’t last

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The financial markets are better than some speculators think. When predicting the performance of markets, everyone wants something better – something that should set them apart from the competition. Such availability is available, but it cannot be easy or long -term, according to research from the Rady School of Management at the University of California San Diego.

“Most importantly, what this work has shown is that our financial markets are very good, so it’s hard to make money from trading,” said Allan Timmermann, a senior financial analyst at UC San Diego’s Rady School of Management and the Dr. Harry M. Markowitz was given a seat on finance and investment. “Inevitably, as the participants in the market – investors, daytraders, investors – are constantly looking for predictive models that they can use through their trading activities. used to be, but because everyone is looking for it, the benefits of having it are short -lived. “

The lesson will be presented in a future issue The Economic Newspaper. It shows that in the United States stock market, “bags,” or short periods of critical forecasting, are associated with long periods of uncertainty. Predictability, when seen, is self -defeating because each side a publisher finds will be compared by others.

The paper confirms this using a simple time -comparison model designed to look at how the arrival and departure patterns of the forecast return.

“Everybody is looking for great knowledge and the competition is strong,” Timmerman said. “If you consider the forecast results and stability, you may be disappointed later or later. Professional investors like hedge funds may be sometime ahead of the market, but usually not for long. for future work. “

The techniques used by investors used satellite images of Home Depot parking lots to predict the company’s revenue. Other oil companies have used helicopters to monitor the level of oil in production facilities in the hopes of determining how much oil will be released and its impact on oil prices. These initiatives have helped businesses gain short -term cornerstones until they can develop innovations, pulling in new revenue streams, that is, eliminating the “margin”. to himself.

“It’s like a peek-a-boo game with the markets,” Timmermann said. “Now you know, you don’t. All investors, all investors and those with weak signals are looking to help them predict future prices. In fact, it’s very difficult to have a financial market because of free investment and intense competition. “

The financial markets are better, but there can be no wrong. Business investors need to answer various difficult questions such as how the industry will recover from the COVID-19 epidemic and how long the war will last in Ukraine and what will be the impact on stock prices. economic growth and development.

“No one has answered these questions well and so the financial markets need to create new insights like we all do,” Timmerman said. “This educational process can raise some kind of predictions, because each area is different and it’s not a copy of the past.”

Timmermann co -authored the study, Pockets of Predictability, with Leland E. Farmer of the University of Virginia and Lawrence Schmidt from the Massachusetts Institute of Technology.


Research provides new insights into how to increase funding


More information:
The sacks of prophecy, The Economic Newspaper (2022).

Presented by the University of California – San Diego

Directions: Today’s financial markets can get the best, but it won’t last (2022, March 29) Retrieved 30 March 2022 from https://phys.org/news/2022-03-edge-today -financial-wont. html

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