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Tuckzedo 007
Lauren Hirsch
Shavonne Howard
Darius Li
Carlos Mendez
Avraj Sandhu
Nathan Walsh
Develops from a study conducted by French
mathematician, Louis Bachelier
Oui, I conclude that the past performance of
stock returns have no statistical implication
on their future performance. Ooh la la!
In 1970, Eugune Fama penned:
The Efficient Capital Market Thesis: Not
only can you not predict the market based on past
returns, you also can’t predict it by any other complex
means of analysis. All available information is
imbedded into the price of a stock
1) Weak
2) Semi-strong:
3) Strong
An investor cannot “beat the market.” There is no way for
him/her to know something about a stock that isn't already
reflected in the stock's price.
The Stock Market is fair and RATIONAL
Underlying Premise
But, do rational objects ever look like
this?.....
Analyzing the Efficient
Market Theory in the
context of the Vix and the
2008 Stock Market Crash
Introduced in 1993, VIX is the ticker symbol for the
Market Volatility Index, which trades on the
Chicago Board Options Exchange
It measures how much investors think the S&P will
vary over the next 30 days
The Fear Index
Investors adverse to volatility do NOT like a high Vix
Weighted average of puts and pulls
Expressed in terms of percentage change on an annual
basis, so – if VIX is 15, this represents an expected
annualized change of 15% over the next 30 days
1) In October 2008, stock prices were low and dropping; investors were
very fearful and willing to pay a lot to protect themselves against their
downward movement
2) Vix generally moves inversely with S&P 500
3) Only other comparable spike was in 2000 after dot.com bubble burst
Some people see the stock market crash of 2008
and its associated volatility as disproving the
Efficient Market Theory:
1. Not Random?
2. Not Rational?
3. Mass psychology ?
The answers?
Up to you to decide!!!
Great topic for a first date
Whether or not you take credence in the Efficient
Market Theory, it still plays a role in society today
On shows such as Jim Cramer’s Mad Money, we
see its impact…
Gold: BUY!! Bernanke is producing a lot of greenbacks
that it devaluing the dollar; make money off of this by
buying gold!!
CTEL: BUY! City Telecom HK - Changing strategy: raising
price for “triple play service”; representing a growth in
dividend play; free cash flow is expected to double
CISCO: Sell !!! It’s too big and they haven’t gotten their act together.
However - doesn’t think their weak plunging prices are indicative of the
technology market on the whole
Lightning round: Terra Nitrogen – BUY!; DineEquity - BUY! Panera –
BUY! Chipotle – BUY!; TransGlobe – speculative, but buy!
The show’s premise is to provide information to investors,
so they can make wise investment decisions. Even the
commercials, such as GM and Vanguard, are informational.
This objective is in accordance with the Efficient Market
Theory; it presents the stock market as an open and fair
platform, determined only by information.
Vix

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Vix

  • 1. Tuckzedo 007 Lauren Hirsch Shavonne Howard Darius Li Carlos Mendez Avraj Sandhu Nathan Walsh
  • 2. Develops from a study conducted by French mathematician, Louis Bachelier Oui, I conclude that the past performance of stock returns have no statistical implication on their future performance. Ooh la la!
  • 3.
  • 4. In 1970, Eugune Fama penned: The Efficient Capital Market Thesis: Not only can you not predict the market based on past returns, you also can’t predict it by any other complex means of analysis. All available information is imbedded into the price of a stock
  • 6. An investor cannot “beat the market.” There is no way for him/her to know something about a stock that isn't already reflected in the stock's price. The Stock Market is fair and RATIONAL Underlying Premise
  • 7. But, do rational objects ever look like this?.....
  • 8. Analyzing the Efficient Market Theory in the context of the Vix and the 2008 Stock Market Crash
  • 9.
  • 10.
  • 11. Introduced in 1993, VIX is the ticker symbol for the Market Volatility Index, which trades on the Chicago Board Options Exchange It measures how much investors think the S&P will vary over the next 30 days
  • 12. The Fear Index Investors adverse to volatility do NOT like a high Vix
  • 13. Weighted average of puts and pulls Expressed in terms of percentage change on an annual basis, so – if VIX is 15, this represents an expected annualized change of 15% over the next 30 days
  • 14. 1) In October 2008, stock prices were low and dropping; investors were very fearful and willing to pay a lot to protect themselves against their downward movement 2) Vix generally moves inversely with S&P 500 3) Only other comparable spike was in 2000 after dot.com bubble burst
  • 15. Some people see the stock market crash of 2008 and its associated volatility as disproving the Efficient Market Theory: 1. Not Random? 2. Not Rational? 3. Mass psychology ?
  • 16. The answers? Up to you to decide!!! Great topic for a first date
  • 17. Whether or not you take credence in the Efficient Market Theory, it still plays a role in society today On shows such as Jim Cramer’s Mad Money, we see its impact…
  • 18.
  • 19. Gold: BUY!! Bernanke is producing a lot of greenbacks that it devaluing the dollar; make money off of this by buying gold!! CTEL: BUY! City Telecom HK - Changing strategy: raising price for “triple play service”; representing a growth in dividend play; free cash flow is expected to double CISCO: Sell !!! It’s too big and they haven’t gotten their act together. However - doesn’t think their weak plunging prices are indicative of the technology market on the whole Lightning round: Terra Nitrogen – BUY!; DineEquity - BUY! Panera – BUY! Chipotle – BUY!; TransGlobe – speculative, but buy!
  • 20. The show’s premise is to provide information to investors, so they can make wise investment decisions. Even the commercials, such as GM and Vanguard, are informational. This objective is in accordance with the Efficient Market Theory; it presents the stock market as an open and fair platform, determined only by information.