Stock Market Integration & Disaster

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In summary, the conversation discusses the concept of integrating a stock graph and its physical value, which is found through taking the derivative at a certain point in time. The discussion also touches on the relevance of stock market crashes and the unpredictability of measuring change in different time intervals. The conclusion is that it is important to analyze the data from all time intervals to make more reliable predictions.
  • #1
Vodkacannon
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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?
 
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  • #2
Vodkacannon said:
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?

This quantity has no particularly significant meaning (it would appear as a term in an average yield calculation I suppose).

Vodkacannon said:
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.

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?

Vodkacannon said:
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?

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?
 
  • #3
Thank you for your insight.
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?
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.
 

1. What is stock market integration?

Stock market integration refers to the interconnectedness and interdependence of different stock markets around the world. It allows for the buying and selling of stocks from one market to another, creating a global marketplace for investors.

2. How does disaster affect the stock market?

Disasters, whether natural or man-made, can have a significant impact on the stock market. They can cause uncertainty and fear among investors, leading to a decline in stock prices. They can also disrupt supply chains, affect consumer behavior, and damage businesses, all of which can have a negative impact on the stock market.

3. Can disasters lead to stock market integration?

Yes, disasters can sometimes lead to stock market integration. In times of crisis, investors may turn to other markets for stability and diversification, leading to increased cross-border investments and integration. However, this integration may be temporary and short-lived, as markets tend to revert to their original state once the crisis has passed.

4. How can stock market integration help in disaster recovery?

Stock market integration can help in disaster recovery by providing a source of capital for affected companies. If a disaster strikes a particular market, companies can turn to investors from other markets for funding and support. This can help businesses rebuild and resume operations in a timely manner, aiding in the overall recovery of the affected region.

5. Are there any risks associated with stock market integration and disaster?

Yes, there are some risks associated with stock market integration and disaster. One of the main risks is the potential amplification of a crisis. If one market is affected by a disaster, it can quickly spread to other integrated markets, causing a domino effect and exacerbating the impact. Additionally, increased cross-border investments can also lead to contagion, where a crisis in one market can spread to others. It is important for investors to carefully consider the potential risks and diversify their investments to mitigate them.

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