The Adaptive Market Hypothesis uses theories of behavioral economics to update the aging Efficient Market Hypothesis.
There have been many debates surrounding the Efficient Market Hypothesis and its validity, and a lot of research over the last 15 years or so has been done which suggests that behavioral finance holds many of the keys to an accurate “universal theory” of the markets.
A marriage between the two schools of thought has given birth to the Adaptive Market Hypothesis, coined in 2004 by Andrew Lo of MIT. Behavioral and evolutionary principals come into play when theorizing about the large-scale behavior and adaptation of humans in a system.
Together with the tenets of the efficient market hypothesis, the theory gives us a more realistic lens through which to interpret the markets and the explain the anomalies and inefficiencies that are not addressed by the Efficient Market Hypothesis alone.
Behavioral ideas such as trial and error, self-serving bias, and hive mentality bring the human element to a discussion which previously lacked it.
Markets have been around for much longer than most people think. The Tulip bubble happened in the 1500's!
A ratio put spread uses multiple put contracts in a certain ratio that makes them start off delta-neutral
Generally a plan will allow you to leave your assets in there indefinitely, but this is probably not ideal for you
You should buy your Life Insurance from a company that is reliable, financially stable, and reputable
An RIA is an asset manager that is registered with the SEC (in whatever state(s) they operate)
Bear markets are loosely defined as periods when the market experiences declines in magnitude of 20% or more in stock trading
Dilution is the disassociation of value from current common stock shares due to the issuance of additional shares
Bankruptcy court is a special judicial proceeding which determines how a debtor can settle accounts and move on
A Fibonacci Extension is the prediction of a trend’s extent after an initial push and a retracement has been seen
The Symmetrical Triangle Top pattern forms when a currency pair price fails to retest a high or low and forms two trend lines