” ‘Big mo’ is your friend in the stock market” this Valentine’s Day
February 15, 2008
There’s an interesting video on FT today (John Authers, the Short View) reporting on some research which posses an empirically supported challenge the random walk hypothesis from efficient market theory. Historical research done by London Business School shows that there has been, in practice, a momentum effect during the 20th century in the way the market has moved. According to the study, the effect can be traced across several markets with the exception of the U.S. (See synopsis or press release.) Authers concludes that “maybe there’s something to be said for trading heavily and just looking at who’s hot…”
Any guesses or predictions as to what the potential performative effect of a piece of research like this might be?
(In passing, I was puzzed as to what ‘big mo’ might mean. Turns out it has some rather naughty uses which I’ll leave the reader to look up on their own.)