A Random Walk Down Wall Street
There is a sense of complexity today that has led many to believe the individual investor has little chance of competing with professional brokers and investment firms. However, Malkiel states this is a major misconception as he explains in his book “A Random Walk Down Wall Street”. What does a random walk mean? The random walk means in terms of the stock market that, “short term changes in stock prices cannot be predicted”. So how does a rational investor determine which stocks to purchase to maximize returns? Chapter 1 begins by defining and determining the difference in investing and speculating. Investing defined by Malkiel is the method of “purchasing assets to gain profit in the form of reasonably predictable income or appreciation over the long term”. Speculating in a sense is predicting, but without sufficient data to support any kind of conclusion. What is investing? Investing in its simplest form is the expectation to receive greater value in the future than you have today by saving income rather than spending. For example a savings account will earn a particular interest rate as will a corporate bond. Investment returns therefore depend on the allocation of funds and future events. Traditionally there have been two approaches used by the investment community to determine asset valuation: “the firm-foundation theory” and the “castle in the air theory”. The firm foundation theory argues that each investment instrument has something called intrinsic value, which can be determined analyzing securities present conditions and future growth. The basis of this theory is to buy securities when they are temporarily undervalued and sell them when they are temporarily overvalued in comparison to there intrinsic value One of the main variables used in this theory is dividend income. A stocks intrinsic value is said to be “equal to the present value of all its future dividends”. This is done using a method called discounting. Another variable to consider is the growth rate of the dividends. The greater the growth rate the more valuable the stock. However it is difficult to determine how long growth rates will last. Other factors are risk and interest rates, which will be discussed later. Warren Buffet, the great investor of our time, used this technique in making his fortune.
The second theory is known as the “castle in the ai...
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... while using the beta approach as a guide. Returns may also rely on general market swings, changes in interest rates and inflation, to changes in national income and other economic factors.
Chapter 11 closes our discussion with several insights into the efficient market theory. There have been many attempts to discredit the random walk theory, but none of the theories hold against empirical evidence. Any pattern that is noticed by investors will disappear as investors try to exploit it and the valuation methods of growth rate are far too difficult to predict. As we said before the random walk concludes that no patterns exist in the market, pricing is accurate and all information available is already incorporated into the stock price. Therefore the market is efficient. Even if errors do occur in short-run pricing, they will correct themselves in the long run. The random walk suggest that short-term prices cannot be predicted and to buy stocks for the long run. Malkiel concludes the best way to consistently be profitable is to buy and hold a broad based market index fund. As the market rises so will the investors returns since historically the market continues to rise as a whole.
Every summer, millions of people take advantage of rising temperatures by swimming in backyard pools. Tragically though, hundreds of youngsters fall victim to drowning each year. As such, it is crucial to communicate a clear set of rules to help avoid accidents and promote safety both in and around the water. The urgent care providers at 181st Street Urgent Care Center in New York, NY, suggest the following set of guidelines to ensure a safe and festive swim season.
...nd race. In other words, race and gender have an effect on crime considering there is not only a clear distinction between the types of crimes, but also the frequency of crime being committed. Furthermore, psychological positivism suggests that crime is the result of mental disorders and ineffective parenting, which goes completely against the classical idea that people choice to become criminals. In addition to biological and psychological elements, there are the social factors that can influence people to engage in criminal activity. As a matter of fact, social and economic pressures play a major role in the cause of crime since people are more likely to break the law when they have nothing else to lose. Therefore, the biological, psychological, and social factors should all be considered when trying to establish a reason for every crime.
Right and left realists both offer completely different solutions to crime, primarily because the way in which they focus on looking into crime is completely different. Left realists favour victim surveys (Lea, Left Realism: a framework for the analysis of crime, 1992), saying crime is caused by relative depression, social injustice and marginalisation whilst right realists favour looking at official statistics when studying crime, they say crime is caused by a simple lack of control. However when looking at both sides of realism and their solutions to crime both show to have positive and negative solutions, meaning it can be argued either way regarding
Over the previous five years, the return of the ProIndex fund have outperformed the S&P 500 index, as the 5-year-return is nearly 3 times than the benchmark and the annualised return is nearly 2 times than the benchmark. It means ProIndex fund has a significant increase in value within that period. However, the ProIndex Fund has a higher standard deviation which means it is more risk than the S&P 500 index. Especially for the annualised standard deviation, it is approximately 10% higher than the benchmark. The correlation coefficient between the ProIndex and benchmark is about 0.65 which means both two variables are positive changing consistently, but there are still some other factors which have impacts on the relationship between two variables as the correlation is less than 1. Furthermore, the higher beta, 1.0132, which is more than 1 and it may be one of the reasons for high risk as well since it is more sensitive to the market change. It means that the ProIndex fund would increase by 1.0132% if the market increased by 1%.
...ization of criminal justice and control. As I have tried to describe the profit impotice and the expansion of control can go hand in hand. Put bluntly, increases in the fear of crime and related demands for security even beyond any demonstrated need serve the interest of the private sector. As Niels Christie puts it: "only rarely will those working in or for any industry say now, just now, the size is about right. Now we are big enough, we are well established, we do not want any further growth. An urge for expansion is built into industrial thinking. The crime control industry is no exception". I think that in face of the ideology and practices of privatization basic questions about values, human rights and justice get left behind. Privatization deflects attention from and distorts perceptions of real social problems. Perhaps the greatest challenge facing not only researchers and policy makers but also entrepreneurs themselves is to maintain a humanitarian focus on the consequences of privatization and despite its own rational, utilitarian and managerial discourses. I wish colleagues and students at Lozovoy University good luck as they continue to meet this challenge. Thank you.
Jock Young’s book “The Criminological Imagination” very clearly spells out the author’s feeling that orthodox criminology has lost its way and has been swallowed up into obscurification through bogus, post-modern positivism. Young postulates, the cost of this phenomena is the loss of critical thinking and objectivity in the field of criminology. Young contends criminology can be rescued from obscurity if returning to its orthodox beginnings by reducing the impact of neo-liberalism with critical imagination, and not simply succumbing to empirical data to try to explain everything. Young contends, doing so seems to simply cloud the view, thus giving rise to a host of incomplete and overly politicized theories.
“the mission of such positivistic criminology was the creation of a better society through the application of scientific processes” (Criminology 2nd Edition, Tim Newburn, 2013, page 121). This shows that the aim of the positivist school was a achieved and still relevant in today’s study of criminology as the science behind crime is still heavily researched and applied to most crime cases.
...phases. Fabozzi and Francis (1977) conducted a study testing the differential effect of bull and bear market conditions for 700 individual securities listed on the NYSE. It was found that the estimated betas of most of the securities were stable in both market conditions. However, Ray (2010) conducted a similar study over a period of ten years using monthly returns of 30 stocks. The results obtained were both mixed and inconclusive. Bowie and Bradford (1997) found that the tests of beta stability are difficult to interpret on their own. Gombola and Kahl (1990) suggest that an OLS estimate of beta requires an estimation period during which the relationship between the market return and the stock return remain stable. However, without this stability, an alternative for forecasting a time-varying relationship such as the Bayesian adjustment process will be required.
...e efficient. But some markets are more efficient than others. And in markets with substantial pockets of predictability, active investors can strive for outperformance. Peter Bernstein concludes that there is hope for active management: 'the efficient market is a state of nature dreamed up by theoreticians. Neat, elegant, even majestic, it has nothing to do with the real world of uncertainty in which you and I must make decisions every day we are alive.'
According to Perold (2004), ‘CAPM can be served as a benchmark for understanding the capital market phenomena that cause asset prices and investor behavior to deviate from the prescript...
Market efficiency signifies how “quickly and accurately” does relevant information have its effect on the asset prices. Depending upon the degree of efficiency of a market or a sector thereof, the return earned by an investor will vary from the normal return.
Criminology is the study of why individuals engage or commit crimes and the reasons as to why they behave in certain ways in different situations (Hagan, 2010). Through understanding the reasons or why an individual commits a crime, one can come up with ways to prevent and control crime or rehabilitate criminals. There exist a large number of criminology theories, some link crime to an individual or person; they believe a person weighs the cons and pros and makes a conscious decision on whether to commit or not commit a felony. Others see the society as having a duty to make sure that its members do not engage in criminal acts by providing a secure and safe living place. Some claim that some people have hidden or dormant characteristics that determine their reaction or behavior when confronted or put in particular negative conditions (Akers & Sellers, 2012). By understanding and studying these theories, together with applying them to people, psychologists and authorities can prevent criminals from committing or repeating crimes and aid in their rehabilitation. As many theories have emerged over time, they continue to be surveyed and explored, both individually and in combination in order for criminologists to develop solutions and eventually reduce the levels and types of crime. The most popular criminology theories emphasize on the individual, positivist and classical traits. This paper will explore the classical theory, which is among the earliest theories in criminology.
During the summer, families will spend hours by the pool for relaxation and a means for children to be active and have fun. Whether it is with the use of a flotation device or not, children of all ages appreciate the cool water on a hot summer day. Unfortunately, many young children do not know how to properly float and swim on their own; thus, in any given moment a child may lose hold of an object and start sinking. Although in public areas lifeguards are around to rescue anyone drowning, so many families have private pools at their homes that poses a risk to the child. Unfortunately, drowning has increased significantly over the past years and is now the second leading causes of death for children under the age of 14. In order to prevent further fatalities regarding children who are not educated on swimming, I have proposed a possible solution to reduce drowning in the United States.
The efficient market hypothesis has been one of the main topics of academic finance research. The efficient market hypotheses also know as the joint hypothesis problem, asserts that financial markets lack solid hard information in making decisions. Efficient market hypothesis claims it is impossible to beat the market because stock market efficiency causes existing share prices to always incorporate and reflect all relevant information . According to efficient market hypothesis stocks always trade at their fair value on stock exchanges, making it impossible for investors to either purchase undervalued stocks or sell stocks for inflated prices. As such, it should be impossible to outperform the overall market through expert stock selection or market timing, and that the only way an investor can possibly obtain higher returns is by purchasing riskier investments . In reality once cannot always achieve returns in excess of average market return on a risk-adjusted basis. They have been numerous arguments against the efficient market hypothesis. Some researches point out the fact financial theories are subjective, in other words they are ideas that try to explain how markets work and behave.
The Modern portfolio theory {MPT}, "proposes how rational investors will use diversification to optimize their portfolios, and how an asset should be priced given its risk relative to the market as a whole. The basic concepts of the theory are the efficient frontier, Capital Asset Pricing Model and beta coefficient, the Capital Market Line and the Securities Market Line. MPT models the return of an asset as a random variable and a portfolio as a weighted combination of assets; the return of a portfolio is thus also a random variable and consequently has an expected value and a variance.