Dariusz Prokopowicz Nice Question.

The study could be done

1) by undertaking a primary study on investor sentiment

Ref: https://www.nber.org/papers/w13189

2) by studying market efficiency to information

I also agree with thoughts of Tumula DILLESWAR Rao Tumula DILLESWAR Rao Abdolhossein Zameni Ifeanyi Nwanna Samina Rooh Christopher Tai

The new economy illusion of the 1990s is a good case study; we can see that emotions topped logic at the end of the 1990s, stopping at the end of year 2000 without a soft landing. Statistical indicators of that period show only average economic outputs, with high private and public debt levels In the US. The subsequent attacks of 9/11 exactly occured in this ‘bubble expansion‘. One great emotional driver of this ‘tech-no-hype‘ was the collapse of the Soviet system, which reinforced wishful thinking. In fact, much more of a ‘creative destruction‘ happened, which has a deep and negative effect on job creation, if we consider informatic automation progress.

Hello,

Emotions is a very broad subject in psychology. Can you define the type of emotions you want to measure so that we can suggest some tests?

Good luck

Thank you for sharing your idea

Kindly someone explain the rationale behind the stratified random sampling when using for the data collection from the individual investor's ,those who's trading in the stock exchange market.

Regards

The real economy plays different role with the monetary financial markets in today's situation. You could find there is credit bubble originated from the corporate using the balance-sheet switching to increase the debt level but reduce the capital input. It is not allowed in the US after the 2008 financial crisis for those financial institutions. Every financial institution has to pass the stress test the Fed asks every year. But the credit bubble is still there in those corporates which could take advantage of the financial markets. It creates zombies enterprise which has much higher debt-to-equity ratio but still gets lot of attention from people with savings because we have 13 trillion sovereign bonds with zero or negative yield.

Could you relate those buying activities with the emotional human factors or just attribute the phenonmenon to be some kind of yield chasing? Those activities are originated from the real market situation but not human factors.

Stratified random sampling is used, usually, to represent a population strata in an important variables. If, for example, male and female differ in performance in math then it is important to have stratified random sample of male and female. this will insure that the study represent the population accurately.

Thanks for ur response,

Hi,

I suggest an event study analysis.

Emotional factors of investors do not have a place in determination of reactions and returns in an efficient capital market. Free flow of information will ensure all investors are put on the same pedestal.

Confounding variables need to be taken care as well.

Emotions are there in individual investors even there are no bullish or bearish market situations. In your study presence of these situations are assumed. Once we assume such conditions, accordingly we have to go for using available statistical tools for measuring their effect.

Dariusz Prokopowicz Nice Question.

The study could be done

1) by undertaking a primary study on investor sentiment

Ref: https://www.nber.org/papers/w13189

2) by studying market efficiency to information

I also agree with thoughts of Tumula DILLESWAR Rao Tumula DILLESWAR Rao Abdolhossein Zameni Ifeanyi Nwanna Samina Rooh Christopher Tai

In the context of the above discussion, the following question arises:

Can measuring changes in emotions prevailing among stock market investor communities be an important element of the prognostic model used to estimate the likelihood of the appearance of further significant, diametrical changes in the trend of market valuations of securities on stock exchanges and thus identify emerging economic changes in the near future capital markets?

What do you think about this topic?

Please reply

heart beat, blood pressure etc...

Dear Colleagues and Friends from RG,

In the context of the above discussion, I ask the following question: In connection with the development of Financial Industry 4.0 and Business Intelligence, Data Science, Data Analytics, Big Data etc. analytics, will the level of precision of determining future development trends in the scope of fundamental and technical analyzes carried out to investigate the development of the situation and future trends on the markets be increased equity, including stock markets?

Please reply

I invite you to discussion

Thank you very much

Best wishes

Dariusz Prokopowicz

People in Montenegro are saying: Maria walks through the village 30% is dissatisfied..

KAB survey may possibly helpful in adjusting emotional dimensions of investors based on major area of focus.

Dear Colleagues and Friends from RG,

I propose to add to this discussion considerations on the following important issue:

Relationships of psychology with business and economics.

I agree that business and economics are connected or determined to a significant degree with psychology. Examples of the most often cited, described and researched are emotionally determined behavioral behaviors of both consumers in consumer product and service markets as well as stock market investors in capital markets, including securities markets, in addition also currency markets, etc. Issues of the influence of psychological factors on economics can be found also within the scope of marketing activity directed at potential consumers of certain products or services.

Supported by intensively conducted advertising campaigns, the sale of certain types of products and services is particularly determined by psychological issues used in advertising campaigns, which increase the scale of appearance and fashion activities for specific types of products or services. Sometimes the effectiveness of conducted advertising campaigns largely depends on whether the information message contained in advertising spots acts on human emotions and thus generates smaller or larger revenues from the sale of specific products or services. In financial markets, on the other hand, the impact of psychology on investment decisions of individual investors can be significant.

Periodically, in situations of increased speculation in capital markets, imbalances in securities markets, there is a period of investment euphoria, sheep's momentum, investing fashion and, as a consequence, a strong revaluation of securities valuation (bull market) and periods of strong stock market recession, during which there is fear of investing, panic, getting rid of already undervalued shares, bonds, derivatives etc. (bear market). Bull market and bear market phases appear periodically, sometimes cyclically in succession. If in capital markets, including securities, the importance of emotions can be an important factor influencing the decisions of individual investors, then the issue of financial market psychology may be an important topic of scientific research. Another interesting research issue is the determination of the importance of increasing the automation of the process of placing stock exchange orders in connection with the use of automated transaction systems by investment banks.

Therefore, in the context of the above issues, it may be important to verify the research thesis that the growing importance of automated IT transaction systems used for computer orders for the purchase and sale of securities may reduce the impact of financial market psychology. If it was possible to examine this correlation, then another research issue for which a research project could be launched would be to determine the impact of automated IT transaction systems used by investment banks on the issue of stabilizing the stock market situation, the period of recovery after the emergence of the stock market crash, etc.

Do you agree with me on the above matter?

I conduct research in this area. The conclusions of the research I published in scientific publications that are available on the Research Gate portal.

What do you think about this topic?

I invite you to the discussion and scientific cooperation.

Thank you very much.

Best wishes

There are several ways to measure but each one may has their own limitation. To act is to show or to think is to reveal is a big question. People always thinks the action speaks louder than words. The truth is the deed is hard to find unless we have some trasanction or trading data. Then we may face another question- the suggestion of financial advisor. The existence of financial advisor may change the trading behavoiorof investors whcih may correct the biases. Or we may face the automatic mechanism of investing which cares much less on human emotional reaction to the financial market but to invest money monthly or at a fixed-period of time on the ETF products. It makes the emotional biases hard to detect. Fortunately, lately we find the ETF investing may create some unsystematic volatility which is hard to be explained and shown there may be some cognitive biases believing the market is always efficient but creating some arbitrage chance for market participants.

The lately increasing ETF investing and financial advisors' suggestion may largely decrease the dstatus quo or used-to-be biases but create some new biases such as momementum or long term volatility clustering (not short-term),

sentiment measures, stress, gloom and joy... Griffith, J., Najand, M., & Shen, J. (2020). Emotions in the stock market. Journal of Behavioral Finance, 21(1), 42-56.

Sentiment indices based on investor sentiment surveys attempt to measure the stock market sentiment.... Bormann, S. K. (2013). Sentiment indices on financial markets: What do they measure? (No. 2013-58). Economics Discussion Papers.

https://blog.oup.com/2020/03/how-emotions-affect-the-stock-market/

Using twitter to predict the stock market...Behavioral finance researchers have shown that the stock market can be driven by emotions of market participants. In a number of recent studies mood levels have been extracted from Social Media applications in order to predict stock returns. The paper tries to replicate these findings by measuring the mood states on Twitter. The sample consists of roughly 100 million tweets that were published in Germany between January, 2011 and November, 2013. In a first analysis, a significant relationship between aggregate Twitter mood states and the stock market is not found. However, further analyses also consider mood contagion by integrating the number of Twitter followers into the analysis. The results show that it is necessary to take into account the spread of mood states among Internet users. Based on the results in the training period, a trading strategy for the German stock market is created. The portfolio increases by up to 36 % within a six-month period after the consideration of transaction costs... Nofer, M., & Hinz, O. (2015). Using twitter to predict the stock market. Business & Information Systems Engineering, 57(4), 229-242.

This study investigates emotions in Dutch newspaper articles and their effects on, and responses to, opening prices of 21 stocks listed on the Amsterdam Exchange index for twelve years (2002–2013).... Granger causality tests suggest, however, that newspapers rather reflect movements on the stock market the following days by using more negative emotional words after an increase in the change of the opening prices... Strauß, N., Vliegenthart, R., & Verhoeven, P. (2016). Lagging behind? Emotions in newspaper articles and stock market prices in the Netherlands. Public Relations Review, 42(4), 548-555.

Dear All, Dear Colleagues and Friends from RG,

Thank you very much for the answers to the question: How can the level and significance of the emotions of investors operating on the stock exchange market be measured? Thank you very much for your response. Thank you very much for the given bibliographic sources and participation in the discussion. Thank you for the information provided and the link to interesting data in the above-mentioned issues. Your perspective on this issue is interesting and very accurate. I agree with your opinion on this topic. Thank you very much for the information provided and the answer provided. Your statements confirm that the above-mentioned issues are current and developing. Best regards, Have a nice day,

Dariusz Prokopowicz