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An S-Shaped Trail to Wall Street, Synopsis

Survival of the Fittest Reigns at the Stock Market

 

The book treats the New York Stock Exchange as an ecosystem. Stocks at the stock market are considered as species competing for investors' money in the same way rabbits compete for grass. An investor who chooses what stock to buy participates in a process of natural selection where the "fittest" stock wins.

Investors are preoccupied with prices, which are neither indicators of value, nor constitute competitive variables. To study the competitive struggle, one needs to look at the TRUE competition variables for each stock, namely the share volume and dollar value daily exchanged. The study of the evolution of these two variables over time yields not only price forecasts (as per the iPad app Stocks' Futures mentioned earlier) but also less ephemeral insights and understandings about the stock market on such questions as:

  • What will the Dow Jones do in the medium and long term?
  • Is there a "bubble", and if yes, is it going to burst?
  • Can there be an early warning for a major market correction?
  • How long will high volatility last? 
  • Do bonds have any future?
  • Is there any value in stock splitting?
  • How well does a stock that dominates the stock-market floor reward its shareholders?

A stock's competitiveness is quantitatively definded in the book and summarized in Figure 5.3. It has been cast in a user-friendly software application by Ronald McEwan an enthousiastic and competent reader of the book (you can contact him at rmac@juno.com). You can try this application here. To interpret your results afterward read the highlighted text in the book excerpt here.

 
 
 
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