Invented by Charles Dow
in 1896, The Dow Jones Average
) is perhaps the most widely known metric of equity market behaviour.
Calculated as a price weighted average
of thirty stocks
, The Dow is generally eschewed by professional investors who prefer the broader S&P 500
, a so-called market capitalisation weighted index
consisting of 500 stocks.
Regardless, proponents of the Dow claim its simplicity, long history and careful design as a reliable proxy of US economic activity as points in its favour. But can they now claim predicability as well
? [more inside]
High frequency trading crop circles
. Automated trading is flooding stock exchanges with nonsensical orders
making odd patterns like The Knife
at millisecond scales. Bugs, emergent phenomena, or market jamming strategies? No one seems to know.
Academic discussions of stock markets frequently reference The Efficient Markets Hypothesis
; an idea that share prices are fairly valued, their prices reflecting all available information. However folklore such as "Sell in May and go away"
, which proved prudent in 2007, clashes with this theory. [more inside]
The Motley Fool's new CAPS
stock-picking system keeps track of your stock picks and whether they outperformed or underperformed the market. Then everyone's picks are aggregated, weighted by the quality of their past records, to rank individual stocks. Here's how it works.
"Buy Stock in Ipods. Or Da Vinci Codes." Steve Odom's
Smarkets is a web-based stock trading game (and market experiment) based on Amazon.com sales rank.
Consensus View New Yorker
columnist James Surowiecki's book The Wisdom of Crowds
"explores a deceptively simple idea that has profound implications: large groups of people are smarter than an elite few, no matter how brilliant—better at solving problems, fostering innovation, coming to wise decisions, even predicting the future." Now this idea has been put into practice with Consensus View
, a site where you can enter your predictions on stocks, commodities, and currencies, and view the group consensus. (from wsj.com