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Chapter 1:
It's Time
for a New Investment Framework. It
has been more than three decades since the Efficient
Market Hypothesis appeared on the world stage,
and we still lack a practical investment framework,
even though the formula for success seems straightforward:
take a commonsense approach and embrace a pragmatic
stance, and see where it gets us.
Chapter
2:
The Problem. When many, different,
subjective, adaptive, intelligent, and autonomous
agents come together in markets, they bring about
a kind of price dynamics that has baffled financial
economists. But of the list, subjectivity is by
far the most enigmatic and troublesome. How to
deal with subjectivity-related complications?
Start by understanding them.
Chapter
3:
The Power of Pythagoras. Financial
economics is different from physics or chemistry.
In other sciences, the scientific process begins
with observed empirical facts, with the purpose
of attempting to uncover their cause. In financial
economics however, we know what the ultimate cause
is behind all financial market observations. It
is human action. This explains why a different
philosphical basis needs to be applied. The approach?
A deductive process. Just like that used by Pythagoras.
Chapter
4 :
The Toolbox. A new philosophical basis
and an awareness of the complexities arising out
of subjectivity require a new set of theory building
tools. We take a peak into our tool box. Here
you'll find tools with fancy names like: methodological
individualism, methodological subjectivism, the
process of adjustment, and aworlds.
Chapter
5 :
The Theory of Wild Beasts. With a
different philosophical basis and theory building
tools in hand, we are ready to construct. The
problem of understanding price behaviour is divided
into two: a conceptual portion where deduction
is applied to develop universal "truths", and
a second portion where the complexity of market
dynamics is dealt with.
Chapter
6 :
Heart of the Beasts: Rethinking Investing.
We switch gears in this last chapter , and turn
to how one can apply the Theory of Wild Beasts
to investing. How can this new framework help
us to better invest and manage our investment
portfolios?
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