Intelligent Investing in Irrational Markets by P. Mourdoukoutas

By P. Mourdoukoutas

As a video game of economics, making an investment includes the fundamental ideas of economics that support traders establish monetary objectives and constraints, and are available up with the suitable asset and portfolio allocation. Mourdoukoutas outlines the principles for making an investment in irrational markets effectively.

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That’s why it isn’t uncommon to see the stock market rallying when the economy is still in a contraction mode; and the economy expanding when the stock market is still in contraction. 1057/9781137342898  Intelligent Investing in Irrational Markets Because the relationship between inflation and economic activity is complex, there is a decoupling between market and economic performance. 3 page 87). Perhaps even more surprising is that the average GDP growth rate is slightly higher during bear markets compared to bull markets.

Conversely when the stock price drops and stays Apple Inc. 2). Technical analysis has been popular with momentum investing, the following of popular trends, the biotechnology in the 1980s, the hightechs in the late 1990s, the homebuilder and financial stocks between 2005 and 2007 and the social media stocks in 2010–2011. The trouble with this method, however, is that it is based on correlation rather than causality; and it looks at the rear-view mirror, assuming that the future is a repetition of the past is a bias of the emotional brain.

Conversely, a declining stock market undermines household wealth and spending, and economic growth. Likewise, the economy drives the stock market. A strong economy, for instance, boost consumer income and spending, which in turn boost corporate earnings and stock prices. That’s why it isn’t uncommon to see the stock market rallying when the economy is still in a contraction mode; and the economy expanding when the stock market is still in contraction. 1057/9781137342898  Intelligent Investing in Irrational Markets Because the relationship between inflation and economic activity is complex, there is a decoupling between market and economic performance.

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