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Analysis and Comment (11)

Cable is facing the music. Cable is facing the music. Kerim Okten/EPA

Royal Mail row shows we still don’t understand markets

Business secretary Vince Cable and the boss of the City is facing questions from parliamentary committees this week over the much-maligned sale of a stake in Royal Mail. So will we finally have a definitive…
Irrational decision-making can have significant consequences for financial markets. Irrational decision-making can have significant consequences for financial markets. AAP

Mood swings and the market: how to understand irrational investor behaviour

Fred Tomczyk, a 20-year veteran of the financial services industry, has his finger on the pulse of investor sentiment: “ … the preference for cash that we’re seeing among new investors suggests a stronger…
When emotions meet economics: New York police and protesters clash during the Occupy movement protests on Wall Street. When emotions meet economics: New York police and protesters clash during the Occupy movement protests on Wall Street. AAP

Economics and the brain: how people really make decisions in turbulent times

In a 2008 paper on neuroeconomics, Carnegie Mellon University economist George Loewenstein said: “Whereas psychologists tend to view humans as fallible and sometime even self-destructive, economists tend…
Australia’s trading market faces new competition from today. Australia’s trading market faces new competition from today. AAP

Chi-X launch - what does it mean for the Australian market?

Today for the first time in its history, the Australian Securities Exchange will face competition in equities trading. This means that there will now be a choice of trading venue for the execution of orders…
Sharemarket trading is now mostly out of human hands, thanks to algorithimic programs. Sharemarket trading is now mostly out of human hands, thanks to algorithimic programs. AAP

Out of our hands: the hidden dangers of high-frequency trading

Stock market trading has been transformed over the last two decades in ways that are fated to increase the likelihood of complete market collapse. Stocks used to be traded by human beings through shouted…
London trader Alessio Rastani has told the BBC he “dreamed” of recession. But traders often don’t know how they’ll react to losses. London trader Alessio Rastani has told the BBC he “dreamed” of recession. But traders often don’t know how they’ll react to losses. YouTube

‘Dreaming’ of recession: what to make of market makers and their noise?

Trading in financial securities has sometimes been regarded as a “black box”. This is particularly the case in markets where there is increased uncertainty. The current world economy is a prime candidate…
The only way out of this crisis is to dishonour some of the debt that is weighing down the global economy. The only way out of this crisis is to dishonour some of the debt that is weighing down the global economy. AAP

Ireland, Greece … France? Accepting default is Europe’s only option

The dramatic falls in share prices of Greek debt-laden French banks overnight highlights just how closely tied the current market chaos is to the world’s worsening debt woes. Market crashes like that of…
Unless the US can address structural problems, there no end in sight to this financial crisis. Unless the US can address structural problems, there no end in sight to this financial crisis. AAP

Keep an eye on the underlying economic threat, not market ups and downs

Global share markets were faltering even before the decision by Standard & Poor’s to downgrade the US government’s debt. The slump in share markets over the past week reflects a weaker outlook for…
The share market is often driven back into the black by canny investors looking for a bargain. The share market is often driven back into the black by canny investors looking for a bargain. AAP

Global economic shakeout: the zig-zag market heralds nasty times ahead

After falling by almost 20% in week-long sell-off, the Australian share market has bounced back and began trade today up more than 3.5%. The market’s recovery follows a strong comeback on Wall Street overnight…
Weak labour data sent a signal to investors that US share markets might be overvalued. Weak labour data sent a signal to investors that US share markets might be overvalued. AAP

Accounting for Wall Street’s week of carnage

Share markets in the US and around the world are expected to fall again this week following sharp declines on Wall Street last week. The Dow Jones industrial average closed on Friday down 2.3% for the…