Mimicry among stocks can predict stock market crashes

From PhysOrg.com:

Since early October 2008, when the Dow Jones Industrial Average began its drop that reached a low point the following March, many questions have been raised – particularly about what caused the crash and if it could have been predicted and somehow prevented. Some possible answers involve market volatility, changes in regulations, bank failures, easy credit, or any combination of external influences and internal market dynamics. In a new study, research analysts have found another clue to stock market crashes: high levels of collective stock movements – or market mimicry – tend to precede crashes, which suggests that measuring the mimicry level of the market could provide significant advance warning of an impending stock market crash.


Continued

Advertisements

One Response to “Mimicry among stocks can predict stock market crashes”

  1. I especially love your blogs, thank you for sharing the story.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: