Eduardas Afanasjevas

Several weeks ago I attended a CFA Society seminar on behavioural finance. I really looked forward to the event but it unfortunately disappointed me. The speaker started by mentioning that our brains have to deal with billions of information items every day. The only way to make sense of this massive flow of information is to use some sort of a filtering mechanism. Behavioural research has shown that our brains essentially are highly biased and inconsistent filtering mechanisms. This is not the same as to say that our brains are useless. There simply is no paradigm that can cope with all the variance in the world. What separates successful investors from the unsuccessful ones is not their filtering mechanism but the ability to change it according to the condition in the market. So far, so good I thought at the time but the part of the speech that made sense was over. Read the rest of this entry »

I am all done with my final exams. An amazing year at Cass Business School is now over. I had a bit more time during the last three weeks so I have been reading books:

• “The (Mis)Behavior of Markets” by B. Mandelbrot and R. Hudson
• “Fooled by Randomness” by N. Taleb
• “The Black Swan” by N. Taleb
• “Liar’s Poker” by M. Lewis
• “When Genius Failed” by R. Lowenstein
• “Traders, Guns & Money” by S. Das

I also have been reading some academic papers exploring fractals in financial markets. Perhaps the most interesting paper was “A Multifractal Model of Asset Returns” by B. Mandekbrot, A. Fisher and L. Calvet. There is very little research on this topic but I managed to find several other papers, which I’m planning to read soon.

This is the first post on my new blog. I added the market watch widget and Lex RSS feed. More is coming soon!