Technological Forecasting at the Stock Market
Under the assumption that competition (Darwinian in nature) reigns in the stock market, we analyzethe behavior of company stocks as if they were species competing for investors’ resources. The approachrequires the study of dollar values and share volumes, daily exchanged in the stock market, via logistic growthfunctions. These two variables, in contrast to prices, obey the law of natural growth in competition, which likeevery natural law, is endowed with predictability. A number of unexpected insights about the stock marketemerge. The forecasts indicate that whereas there is no looming crash in the near future, no significant growthshould be expected either. The DJIA is to hover around 9500 depicting large erratic excursions above andbelow this level for a few years. The use of Volterra-Lotka equations demonstrates that the 1987 crash alteredthe stock-bond interaction from a symbiotic to a predator-prey relationship with stocks acting as predators. This research work has lead to the publication of the book "An S-Shaped Trail to Wall Street" by T. Modis,(Growth Dynamics, Geneva, 1999).