First robust alternative to Rational Market thinking I've seen. Let's hope it has legs...
“This is the gist of the Adaptive Markets Hypothesis. It’s taken us a while to get to this point, but the basic idea can be summarized in just five key principles: 1. We are neither always rational nor irrational, but we are biological entities whose features and behaviors are shaped by the forces of evolution. 2. We display behavioral biases and make apparently suboptimal decisions, but we can learn from past experience and revise our heuristics in response to negative feedback. 3. We have the capacity for abstract thinking, specifically forward-looking what- if analysis; predictions about the future based on past experience; and preparation for changes in our environment. This is evolution at the speed of thought, which is different from but related to biological evolution. 4. Financial market dynamics are driven by our interactions as we behave, learn, and adapt to each other, and to the social, cultural, political, economic, and natural environments in which we live. 5. Survival is the ultimate force driving competition, innovation, and adaptation.” —It Takes a Theory to Beat a Theory: The Adaptive Markets Hypothesis (Evonomics) http://evonomics.com/it-takes-a-theory-to-beat-a-theory-andrew-lo/ Sent from my iPhone -- -- Centroids: The Center of the Radical Centrist Community <[email protected]> Google Group: http://groups.google.com/group/RadicalCentrism Radical Centrism website and blog: http://RadicalCentrism.org --- You received this message because you are subscribed to the Google Groups "Centroids: The Center of the Radical Centrist Community" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. For more options, visit https://groups.google.com/d/optout.
