____________________________________________________________________ Before a larger group can see the virtue of an idea, a smaller group must first understand it. "Stranger Suns" George Zebrowski The Armadillo Group ,::////;::-. James Choate Austin, Tx /:'///// ``::>/|/ ravage@ssz.com www.ssz.com .', |||| `/( e\ 512-451-7087 -====~~mm-'`-```-mm --'- -------------------------------------------------------------------- ---------- Forwarded message ---------- Date: Fri, 5 Jan 2001 03:06:26 +0200 From: George Pappas <vagelford@yahoo.com> Reply-To: psychohistory@egroups.com To: psychohistory@egroups.com Subject: [psychohistory] Here is a mail I received and I think will interest the group : STOCK MARKET: FOLLOW THE LEADER To make money in the stock market, you have to understand risk. Physicists have been using statistical physics methods to analyze markets in order to better understand market risks, such as the probability that a large shift in market value will occur during a year-long interval. Real markets have a higher probability of experiencing large changes than conventional "pure chance" would predict, and econophysicists have suggested many schemes to explain this fact. The latest idea, reported in the 25 December PRL, points to the "herding behavior" for which traders are famous. The authors describe a simple computer model where information networks grow randomly until entire "clusters" of traders act on the news and then wait for the next "rumor mill" to grow. The model predicts price fluctuations similar to those of real markets. (V. M. Egu‘luz and M. G. Zimmermann, Phys. Rev. Lett. 85, 5659. COMPLETE Focus story at http://focus.aps.org/v6/st28.html Link to the paper: http://publish.aps.org/abstract/PRL/v85/p5659/) Attempts like that one could create a good basis for the development of a theory of psychohistory. Vagelford