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Stock Market Integration & Disaster

  1. Mar 6, 2013 #1
    If you integrated the seemingly random "curve" of a stock graph (http://www.stockpickssystem.com/wp-.../1929-stock-market-crash-stock-chart-djia.gif), what physical value would you get out of it or does this not make any sense?

    On the contrary, if you took the derivative at a certain point of time you could find the rate of growth at that time. This IS a value that makes physical sense.

    I'm inferring that the y-axis is the index and the x-axis is the date.

    On the graph, just after the peak in 1929, the stock market crashed in the greatest financial disaster ever; the great depression. Guess what, today, the Dow Jones just hit its highest index in recorded history. Should that scare us somewhat?
     
  2. jcsd
  3. Mar 8, 2013 #2
    This quantity has no particularly significant meaning (it would appear as a term in an average yield calculation I suppose).

    Except that this value varies unpredicatbly depending on the time period over which you measure the change. What period are you going to use - a second, an hour, a day, a month?

    No. For various reasons, stock market indices in a country with positive GDP growth will trend upwards. An index which is trending upwards will in general "hit its highest value in recorded history" quite often. If your team is leading by a record margin of 10-0 does that make the other team more likely to score?
     
  4. Mar 9, 2013 #3
    Thank you for your insight.
    Use all of them, analyze all of them. I think that the smaller the time interval, the more unpredictable and chaotic the predictions become. The monthly and yearly graphs may be more reliable.
     
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