Keynes's trading on Wall Street: did he follow the same behaviour when investing for himself and for King's?

2021 ◽  
pp. 1-25
Author(s):  
Eleonora Sanfilippo
Keyword(s):  
Financial Markets ◽  
Detailed Comparison ◽  
Comprehensive Understanding ◽  
Wall Street ◽  
Investment Activity ◽  
King's College ◽  
Tentative Explanation ◽  
Recession Analysis ◽  
Investment Choices ◽  
Trading Behaviour

In the last few years Keynes's investment activity, both as an individual trader and as a manager of institutions’ portfolios, has attracted attention in the specialised literature. Recently his investments on Wall Street, in particular – both on his own account (Cristiano, Marcuzzo and Sanfilippo 2018) and on behalf of King's College, Cambridge (Chambers and Kabiri 2016) – have been analysed, and the evident connection with his theoretical analysis of the functioning of the financial markets contained in chapter 12 of The General Theory has been duly stressed. This article aims to contribute to a more comprehensive understanding of Keynes's trading behaviour on Wall Street by providing a detailed comparison of his investment choices when he traded for himself and for King's. There are similarities, as might be expected, but also significant differences, well worth investigating. As far as the differences are concerned, one of the most striking is to be seen, for instance, in his attitude when, after a period of bull market in 1936, he had to face the spring 1937 burst of the speculative bubble and subsequent recession. Analysis of his behaviour in this specific case reveals that the event took him by surprise but his reaction differed with regard to his personal investments and the King's investments. The prevalence of a ‘buy and hold’ strategy, which, according to Chambers and Kabiri's reconstruction (2016), marked Keynes's behaviour in general (and also in this particular case) when he invested on behalf of King's, was not always his typical choice when the investments were undertaken on his own account. A tentative explanation of this result, which is also grounded on some different features characterising the two portfolios and not sufficiently investigated in previous studies, is at last provided in the article.

Matchmakers and Markets

2020 ◽  
Author(s):  
Yi-Cheng Zhang
Keyword(s):  
Financial Markets ◽  
Policy Maker ◽  
Real World ◽  
World Economy ◽  
Market Theory ◽  
Wall Street ◽  
The Real ◽  
Information Intermediaries ◽  
Consumer Markets ◽  
High Street

In attempting to understand the bewildering complexity of consumer markets, financial markets, and beyond, traditional textbooks and theories will not help much. This book presents a new market theory in which information plays the most important role. Markets are portrayed with three categories of actor: consumers, businesses, and information intermediaries. The reader can determine his own role, and with analysis and examples from the real-world economy, new questions can be raised and individual conclusions drawn. The aim is to stimulate the reader’s own thinking, either as a consumer on the high street, an investor on Wall Street, a policy maker in a government armchair, or an entrepreneur dreaming of the next big opportunity. This book should also generate and inspire academic debates, as the claims and conclusions are often at odds with mainstream theory.

Benefit-Cost Analysis for Financial Regulation

2013 ◽  
Vol 103 (3) ◽  
pp. 393-397 ◽  
Author(s):  
Eric Posner ◽  
E. Glen Weyl
Keyword(s):  
Cost Analysis ◽  
Financial Markets ◽  
Financial Regulation ◽  
Allocative Efficiency ◽  
Social Value ◽  
Wall Street ◽  
Benefit Cost Analysis ◽  
The Social ◽  
Benefit Cost ◽  
Rule Making

Calls for benefit-cost analysis in rule-making, based on the Dodd-Frank Wall Street Reform Act, have revealed a paucity of work on allocative efficiency in financial markets. We propose three principles to help fill this gap. First, we highlight the need for quantifying the statistical cost of a crisis to trade off the risk of a crisis against loss of growth during good times. Second, we propose a framework quantifying the social value of price discovery, and highlighting which arbitrages are over- and under-supplied from a social perspective. Finally, we distinguish between insurance benefits and gambling-facilitation harms of market completion.

From Main Street to Wall Street

2021 ◽  
Author(s):  
Jesper Rangvid
Keyword(s):  
Economic Growth ◽  
Stock Market ◽  
Business Cycle ◽  
Financial Markets ◽  
Stock Returns ◽  
Economic Activity ◽  
Wall Street ◽  
Business Cycle Fluctuations ◽  
Main Street ◽  
Long Run

From Main Street to Wall Street examines the relation between the economy and the stock market. It discusses the academic theories and empirical facts, and guides readers through the fascinating interaction between economic activity and financial markets. Itexamines what causes long-run economic growth and shorter-term business-cycle fluctuations and analyses their impact on stock markets. From Main Street to Wall Street also discusses how investors can use knowledge of economic activity and financial markets to formulate expectations to future stock returns. The book relies on data, and figures and tables illustrate arguments and theories in intuitive ways.In the end, From Main Street to Wall Street helps academic scholars and practitioners navigate financial markets by understanding the economy.

scholarly journals COVID-19 Pandemic and Financial Contagion

2020 ◽  
Vol 13 (12) ◽  
pp. 309 ◽  
Author(s):  
Julien Chevallier
Keyword(s):  
Financial Markets ◽  
High Frequency ◽  
Value At Risk ◽  
Data Science ◽  
High Frequency Data ◽  
Financial Contagion ◽  
Frequency Data ◽  
Var Models ◽  
Wall Street ◽  
Original Contribution

The original contribution of this paper is to empirically document the contagion of the Covid-19 on financial markets. We merge databases from Johns Hopkins Coronavirus Center, Oxford-Man Institute Realized Library, NYU Volatility Lab, and St-Louis Federal Reserve Board. We deploy three types of models throughout our experiments: (i) the Susceptible-Infective-Removed (SIR) that predicts the infections’ peak on 2020-03-27; (ii) volatility (GARCH), correlation (DCC), and risk-management (Value-at-Risk (VaR)) models that relate how bears painted Wall Street red; and, (iii) data-science trees algorithms with forward prunning, mosaic plots, and Pythagorean forests that crunch the data on confirmed, deaths, and recovered Covid-19 cases and then tie them to high-frequency data for 31 stock markets.

Relationships of collapse: network brokerage, opportunism and fraud in financial markets

2017 ◽  
Vol 44 (12) ◽  
pp. 2097-2111 ◽  
Author(s):  
Bryce Hannibal ◽  
Hiroshi Ono
Keyword(s):  
Financial Markets ◽  
Social Relations ◽  
Financial Sector ◽  
Theoretic Approach ◽  
Network Ties ◽  
Wall Street ◽  
Content Type ◽  
Network Characteristics ◽  
Network Location ◽  
Telecommunications Market

Purpose This paper explores the social-behavioral aspects of financial markets. The purpose of this paper is to examine the role of social relations and networks which contributed to the market crash in the US telecommunications sector in the late 1990s. Design/methodology/approach A network theoretic approach is used to examine historical qualitative data. The authors suggest that the network characteristics of financial intermediaries allowed security analysts to control and manipulate information that was disclosed to the investing public. Findings The authors find evidence that brokerage locations in the network of actors within the telecommunications market allowed select individuals opportunities to engage in unethical behavior and malfeasance. The authors further highlight the harmful effects of over-embeddedness by illustrating that strong and dense network ties within the financial sector were exploited to distort the flow and reliability of information. The paper concludes with a note on the generalizability of this study and an examination of the current economic-legal structure of Wall Street. Originality/value Recently, some economists and network scholars have begun examining social relations more thoroughly in the financial sector. This paper is one of the first that focuses specifically on the role and network location of research analysts prior to a market collapse.

scholarly journals Factors Influencing Retail Investors’ Trading Behaviour in the Thai Stock Market

2021 ◽  
Vol 15 (2) ◽  
pp. 26-37
Author(s):  
Wilaiporn Paisarn ◽  
Nongnit Chancharat ◽  
Surachai Chancharat
Keyword(s):  
Stock Market ◽  
Financial Markets ◽  
Survey Data ◽  
Demographic Factors ◽  
Developed Markets ◽  
Factors Influencing ◽  
Behavioural Patterns ◽  
Retail Investors ◽  
Overconfidence Bias ◽  
Trading Behaviour

This paper investigates trading behaviour among Thai retail investors in 2016. Using detailed survey data from 491 investors, we examine the characteristics and behavioural patterns that lead to investor bias. Empirical results in the behavioural finance literature indicate that retail investors may not behave reasonably. Behavioural biases may influence investor decisions and affect financial markets. These studies, however, are limited to subsamples of the overall investor groups studied and mainly focus on developed markets. We find that biases are common among investors and that men are more overconfident than women. Moreover, we discover that investors with more experience in trading are less likely to hold their stocks for long periods of time. Further, investors aged 45 and younger hold more diversified portfolios. Another finding is that participants with an income of more than 50,000 Baht a month and/or who employ a number of brokers hold more diversified portfolios. This evidence is consistent with the findings that have been reported for Turkey, India, and Vietnam, indicating that demographic factors are useful for distinguishing between investors in terms of the level of overconfidence bias they exhibit. This result confirms that demographic factors play a role in differentiating and classifying retail investors and should motivate future researchers to consider these factors in their research.

scholarly journals FINANCING OF INVESTMENT ACTIVITIES OF UKRAINIAN TELECOM COMPANIES

2017 ◽  
pp. 246-252
Author(s):  
Halyna Otlyvanska
Keyword(s):  
Financial Markets ◽  
Comparison Method ◽  
Economic Benefits ◽  
Investment Activity ◽  
Financing Policy ◽  
Technological Gap ◽  
Net Profit ◽  
Telecommunication Companies ◽  
Observation Method ◽  
Intensive Development

Introduction. Ukrainian telecommunication companies operate simultaneously in complex and unstable social and economic conditions. Currently the majority of domestic subscribers have a low level of effective demand. These factors are the main barriers for the effective financing of telecom providers’ investment activity. The purpose of the paper is to determine the conditions and trends of investment activity financing of the three Ukrainian telecommunication companies: Kyivstar, MTS Ukraine and Ukrtelecom. Method (methodology). The method of observation, method of comparison, method of generalization, method of grouping and index scientific method have been applied in the article. Results. The financing of the investment activity of the two largest telecommunication companies in Ukraine, Kyivstar and MTS Ukraine, whose results are stable and effective, is carried out by a self-financing policy. On one hand, the depreciation, amortization, and net profit are accumulated and these companies run the lowest risk of investment activity financing. On the other hand, the companies do not avail themselves of the opportunities to get financing from financial markets and implement it for more intensive development. This policy limits the basis for future economic benefits. In contrast, Ukrtelecom runs more significant risks in financing of investment activity. It actively pursued loans, credits and bonds. However, this policy is not effective because such investments are not enough to overcome the technological gap caused by constant innovation. In addition, internal problems exist.

scholarly journals RESEARCH OF ECONOMIC BEHAVIOR OF HOUSEHOLDS AS THE INVESTORS OF THE MARKET

2017 ◽  
Vol 19 (2(64)) ◽  
pp. 88-93
Author(s):  
N.I. Duchinska ◽  
O.V. Finogeeva
Keyword(s):  
Financial Markets ◽  
National Economy ◽  
World Economy ◽  
Economic Behavior ◽  
Real Sector ◽  
Financial Instruments ◽  
Investment Activity ◽  
Modern Development

In the article the basic reasons of households` behavior as national economy investors are studied. The role of financial and banking in the process of individual households` savings attraction to the real sector is defined. The present financial instruments are analyzed. Research objective is determination of the main motives in behavior of a household not only to save, but also conscious to be an investor of national economy.In this research it is suggested to consider housekeeping as a potential investor, by means of introduction of new financial instruments and perfecting the institutional copulas of all participants of investment market.. Application of the newest financial instruments at the investment market of Ukraine is a pressing question from position of the use of all possibilities of modern development of society. International experience of the developed financial markets gives an opportunity to Ukraine to be integrated in a world economy, that is a necessity for bringing in of foreign investors, free motion of capitals, raising of competitiveness of national economy. Further directions of research of investment potential of housekeeping consist in development and improvement of new modern instruments of investment market, with the self-weighted risks and well-regulated legislatively. Also a separate question in relation to the increase of investment activity of housekeeping is an analysis of motivational mechanisms of behavior of man that encourages her to investment activity.

Multilateral governance of financial markets: the case of sovereign wealth funds

2020 ◽  
Vol 61 (4) ◽  
pp. 391-410
Author(s):  
George Gilligan
Keyword(s):  
Financial Markets ◽  
Sovereign Debt ◽  
Global Financial Crisis ◽  
Financial Sector ◽  
Sovereign Wealth Funds ◽  
Investment Activity ◽  
Fund Managers ◽  
The Great Depression ◽  
The Us ◽  
The Uk

The glaring deficiencies of the US sub-prime market in 2007 evolved through 2008 and 2009 into a fully blown global financial crisis (GFC), the worst since the Great Depression of the 1930s. That in turn has spawned sovereign debt crises in a number of European countries in 2010, most dramatically in Greece and Ireland. These events have prompted not only national responses, such as the austerity budgets that have been handed down by a large number of European governments including Greece, Spain and the UK, but also multilateral regulatory initiatives under the auspices of organisations such as the G202 and the International Monetary Fund (IMF). Governments across the world have felt compelled to hurl billions ofdollars into saving financial institutions from collapse, in some jurisdictions effectively the nationalisation of some banks. The regulatory landscape of the financial sector both nationally and internationally is being dramatically reshaped. This increasing regulatory activism of the state is clearly recognised and has received widespread support. What is less widely known is the increasing number of jurisdictions in recent years that are ramping up their levels of investment activity and the potential regulatory repercussions of larger staterelated pools of capital in international financial markets. This paper considers the issue of multilateral regulation of financial markets through the lens of Sovereign Wealth Funds (SWFs),3 discussing their evolution, especially the implications of their increasing size and prevalence in relation to developments in multilateral governance of the financial sector. The paper incorporates the findings of a number of semistructured interviews (n = 42) with SWF stakeholders in Australia, China, Norway, the UK and the US. Those interviewed include: SWF personnel, regulators (both national and international), analysts, bankers, brokers, fund managers, governance professionals, academics and financial journalists.

Taking the Floor

2019 ◽  
Author(s):  
Daniel Beunza
Keyword(s):  
Organizational Culture ◽  
Financial Markets ◽  
Social Relations ◽  
Moral Disengagement ◽  
Financial Models ◽  
Financial Reform ◽  
Moral Norms ◽  
Wall Street ◽  
Use Of Models ◽  
Blind Spots

Debates about financial reform have led to the recognition that a healthy financial system does not depend solely on how it is structured—organizational culture matters as well. Based on extensive research in a Wall Street derivatives-trading room, this book considers how the culture of financial organizations might change in order for them to remain healthy, even in times of crises. In particular, the book explores how the extensive use of financial models and trading technologies over the recent decades has exerted a far-ranging and troubling influence on Wall Street. How have models reshaped financial markets? How have models altered moral behavior in organizations? The book takes readers behind the scenes in a bank unit that, within its firm, is widely perceived to be “a class act,” and it considers how this trading room unit might serve as a blueprint solution for the ills of Wall Street's unsustainable culture. It demonstrates that the integration of traders across desks reduces the danger of blind spots created by models. Warning against the risk of moral disengagement posed by the use of models, the book also contends that such disengagement could be avoided by instituting moral norms and social relations. The book profiles what an effective, responsible trading room can and should look like.

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