(Press-News.org) COLLEGE PARK, MD (June 8, 2011) -- When the current financial crisis hit, the failure of traditional economic doctrines to provide any sort of early warning shocked not only financial experts worldwide, but also governments and the general public, and we all began to question the effectiveness and validity of those doctrines.
A research team based in Israel decided to investigate what went awry, searching for order in an apparently random system. They report their findings in the American Institute of Physics' journal AIP Advances.
The novelty of their study is the incorporation of time variation of "human factors" into mathematical analysis. The team, led by Dr. Yoash Shapira, former head of the Atomic Energy Commission Research and currently a guest scientist at Tel Aviv University, along with Eshel Ben-Jacob, a professor of physics, Tel Aviv University School of Physics and Astronomy, and his doctoral student Dror Y. Kenett, hypothesized that temporal order (arrangement of events in time) should be hidden in variables associated with fear, such as volatility.
They analyzed the volatility time series of 10 different stock markets from seven countries over a period of about 50 years and, rather than following traditional economic analyses, they analyzed time variations in the volatility—or the "volatility of volatility," a.k.a. "fear volatility".
In all markets studied, analysis revealed the existence of hidden temporal order in the volatility and very high correlations between the volatility and the magnitude of price variations. This marks the first time hidden temporal order has been found in these market "human factors."
"To a non-economist, economic theories seem decoupled from human reality. The fundamental assumption is that investments are made rationally. But investors can behave irrationally—driven largely by greed and fear, and other human factors," explains Ben-Jacob. "It's also odd that many mathematical analyses, such as the design of investment portfolios, assume no memory. It's assumed that stock prices behave with no apparent temporal order. Yet investors, including professional traders, take into account past behavior and are particularly influenced by the variation in prices or the volatility associated with the fear index."
The existence of such volatility order, or "ordered fear," implies that proper portfolio design should take into consideration the "volatility of volatility," according to the team. For example, the common approach to reducing risk is to select stocks with negative or low correlations in their sequence of returns. The new findings suggest that selection criteria should incorporate the correlations in the stocks' volatility dynamics.
"We're working on incorporating human factors into market analysis," Ben-Jacob says, "by constructing a new parameter to replace the traditional systemic risk parameter."
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Dick Patrick Studios releases new "Shop, Prep, Cook, Taste" Promo Book.
Dick Patrick Studios has teamed up with designer Garrett Owen to create a new promo piece entitled "Shop, Prep, Cook, Taste." The goal of the brochure is to showcase Patrick's holistic approach to shooting food photography by breaking down the food industry into its four component parts and illustrating them with photography.
Each dish in the piece has a unique story all its own, and Patrick uses his skills with the camera to bring every step in the food preparation process ...
More and more pathogens are becoming immune to antibiotics. Some bacteria can no longer be combated. The World Health Organization WHO is warning about resistance to drugs which were once so potent. The WHO's director-general Margaret Chan has pointed out that if measures are not taken quickly, it may soon not be possible to treat many frequently occurring infections. Figures released by the WHO show that in 2010 nearly half-a-million people were infected with a strain of tuberculosis which is resistant to many antibiotics – one third of those infected died. The Organization ...
An article in the current issue of Technology & Innovation, Proceedings of the National Academy of Inventors ™ reports on the bright future and enormous need for stem cell therapeutics that may offer hope for those suffering from debilitating and deadly diseases.
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Stem cell transplantation may offer therapy through "simple cell replacement" procedures to restructure damaged organs, tissues and cells, or provide methods for "reawakening" biological cues to regenerate cells.
"The future for stem cell applications is indeed promising, ...
The plane takes off from Munich in bright weather, temperature 10 degrees Celsius, and lands in Anchorage, Alaska, in driving snow, temperature minus 15. Parked on the airfield overnight, the aircraft takes off the next morning at a freezing minus 25 degrees, heading for Dubai, where the weather is a sunny 32 degrees. The temperature on the outside of the fuselage is over 80 degrees. The rapid changes in temperature pose a challenge for the technical systems and materials. How can it be ensured that the onboard equipment will function in all circumstances? Scientists at ...
Researchers identify gender disparities in the appropriate use of nuclear stress tests
More women than men are unnecessarily referred for nuclear stress tests
Majority of inappropriate studies ordered by primary care physicians
PROVIDENCE, R.I. – New research from cardiologists at Rhode Island and The Miriam hospitals suggests a possible gender disparity in how patients are referred for nuclear stress tests, an imaging technique that measures blood flow to the heart muscle both at rest and during periods of stress, such as exercise.
According to the study, published ...
June 8, 2011 – Researchers at Children's Hospital Boston have found a marker called ABCB5 that both tags a small proportion of cells within colorectal cancers and fuels resistance in those cells to standard treatments. The results indicate that eliminating ABCB5-expressing cells is crucial for successful colorectal cancer treatment, while adding to the growing body of evidence for a theory of cancer growth called the cancer stem cell hypothesis.
An international team led by Brian J. Wilson, PhD, Tobias Schatton, PhD, and Markus Frank, MD, of the Transplantation Research ...
A new study from biology researchers at Baylor University and the University of Maryland-Baltimore has found that there are consistent and widespread declines in stream biodiversity at lower levels of urban development more damaging than what was previously believed.
The study found that aquatic life actually shows significant loss of biodiversity with less than two percent of developed land in a watershed. This is much less that what a decade-old analysis widely cited by environmental policymakers suggests that it takes up to 15 percent of solid surfaces like roads ...
STANFORD, Calif. — New research has shown that children's risk for learning and behavior problems and obesity rises in correlation to their level of trauma exposure, says the psychiatrist at the Stanford University School of Medicine and Lucile Packard Children's Hospital who oversaw the study. The findings could encourage physicians to consider diagnosing post-traumatic stress disorder rather than attention deficit/hyperactivity disorder, which has similar symptoms to PTSD but very different treatment.
The study examined children living in a violent, low-income neighborhood ...
Almost universally, red means stop. Red means danger. Red means hot. And analyzing the results in the 2004 Olympics, researchers have found that red also means dominance. Athletes wearing red prevailed more often than those wearing blue, especially in hand-to-hand sports like wrestling.
Why? Is it random? Is it cultural? Or does it have evolutionary roots? A new study of male rhesus macaques strongly suggests it's evolution. "The similarity of our results with those in humans suggests that avoiding red or acting submissively in its presence may stem from an inherited ...
Researchers from NOAA have discovered a potent and highly-debilitating toxin in the endangered Hawaiian monk seal, a first-of-its-kind chemical finding that is now prompting investigations of other marine mammals in the state.
The toxin, ciguatoxin, is produced by marine algae common on coral reefs, and accumulates in fish species that are consumed by humans. Ciguatera, the human disease caused by ciguatoxin, affects thousands of people every year worldwide and comes in the form of acute gastrointestinal and neurological illness with symptoms resembling chronic fatigue ...
