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Improving Our Knowledge on Stock Market Behaviors
History and Beyond
Welcome to InvestmentTheory.org. Here you will find summaries of the most well-known financial theories to understand the stock market behaviors. We want to question and challenge existing academic foundations that have masked some of the fraudulent actions in the financial services industry.
We develop this site to empower stock market investors. The site and its sister site StockMarketTheory.com are investor education resources. It is our tribute to Charles Dow, who founded the Wall Street Journal (1889), created the Dow-Jones Industrial Average (1896), wrote 255 Wall Street Journal editorials (1851–1902) to guide investors to make sound decisions. Our goal is to advance investment research and take steps forward. Hopefully, our effort will enable investors to avoid costly mistakes and never be fooled again by profit-driven and abusive practices in the industry. The root causes are those academic theories with non-realistic and over-simplified mathematical assumptions.
My name is Charlie Q. Yang. I am the editor for this site. As an engineering doctorate with an aptitude for scientific discovery, I want to be an independent advocate for investors and to expose Wall Street for what it truly is.
Earlier in my career, I devoted myself to the success of mobile communications. What do Wall Street and wireless data have in common? Uncertainty. Problems associated with data transmission are very similar to issues a financial planner faces - designing the optimal plan (system) to reach a goal (destination). In 1994, I discovered a new probability distribution to capture non-normal statistics while working at Bell-Northern Research Labs. My curiosity drove me to work in the financial industry. I never stopped continuing my research in detecting intrinsic value over market noise.
In a 2013 event honoring the work of Fama and Shiller, the Nobel Prize committee highlighted how far the economics profession remains from agreeing on the answer to a basic question: How do markets work? It encapsulates the state of modern economics,” said Justin Wolfers, an economist at the University of Michigan. “We have big important questions that remain largely open and we have giants bringing evidence to bear. And the answer turns out to be more complicated than markets are efficient — or markets are inefficient.”
The Charles Dow followers derived the Dow Theory based on his 255 Wall Street Journal editorials (1932). Most principles are still valid today, but the theory needs to be updated, refined, and expanded, not just viewed as the basis for technical analysis. The more recent Efficient Market Theory rejected the use of technical and fundamental analysis. You will find on this site the evidence that the EMT failed to fully appreciate the power of investor behaviors when a crisis happening. The Modern Portfolio Theory and its derived Capital Asset Pricing Model are based on the over-simplified mathematical assumptions documented by the recent Behavioral Finance findings. Isaac Newton's regret (I can calculate the motions of the heavenly bodies, but not the madness of the people) and Charles Dow's mission (Dow never published any books) motivate me to create this site by working with investors together to advance our scientific yet practical knowledge on the stock market behaviors.
We develop this site to empower stock market investors. The site and its sister site StockMarketTheory.com are investor education resources. It is our tribute to Charles Dow, who founded the Wall Street Journal (1889), created the Dow-Jones Industrial Average (1896), wrote 255 Wall Street Journal editorials (1851–1902) to guide investors to make sound decisions. Our goal is to advance investment research and take steps forward. Hopefully, our effort will enable investors to avoid costly mistakes and never be fooled again by profit-driven and abusive practices in the industry. The root causes are those academic theories with non-realistic and over-simplified mathematical assumptions.
My name is Charlie Q. Yang. I am the editor for this site. As an engineering doctorate with an aptitude for scientific discovery, I want to be an independent advocate for investors and to expose Wall Street for what it truly is.
Earlier in my career, I devoted myself to the success of mobile communications. What do Wall Street and wireless data have in common? Uncertainty. Problems associated with data transmission are very similar to issues a financial planner faces - designing the optimal plan (system) to reach a goal (destination). In 1994, I discovered a new probability distribution to capture non-normal statistics while working at Bell-Northern Research Labs. My curiosity drove me to work in the financial industry. I never stopped continuing my research in detecting intrinsic value over market noise.
In a 2013 event honoring the work of Fama and Shiller, the Nobel Prize committee highlighted how far the economics profession remains from agreeing on the answer to a basic question: How do markets work? It encapsulates the state of modern economics,” said Justin Wolfers, an economist at the University of Michigan. “We have big important questions that remain largely open and we have giants bringing evidence to bear. And the answer turns out to be more complicated than markets are efficient — or markets are inefficient.”
The Charles Dow followers derived the Dow Theory based on his 255 Wall Street Journal editorials (1932). Most principles are still valid today, but the theory needs to be updated, refined, and expanded, not just viewed as the basis for technical analysis. The more recent Efficient Market Theory rejected the use of technical and fundamental analysis. You will find on this site the evidence that the EMT failed to fully appreciate the power of investor behaviors when a crisis happening. The Modern Portfolio Theory and its derived Capital Asset Pricing Model are based on the over-simplified mathematical assumptions documented by the recent Behavioral Finance findings. Isaac Newton's regret (I can calculate the motions of the heavenly bodies, but not the madness of the people) and Charles Dow's mission (Dow never published any books) motivate me to create this site by working with investors together to advance our scientific yet practical knowledge on the stock market behaviors.