投资学原理估值与管理全套配套课件乔丹英文PPT教师手册解决方案 Chap007.ppt 65页

7 LearningObjectivesYoushouldstrivetohaveyourinvestmentknowledgefullyreflect:1.Thefoundationsofmarketefficiency.2.Theimplicationsoftheformsofmarketefficiency.3.Marketefficiencyandtheperformanceofprofessionalmoneymanagers.4.Whatstockmarketanomalies,bubbles,andcrashesmeanformarketefficiency. TheMarket“Amarketisthecombinedbehaviorofthousandsofpeoplerespondingtoinformation,misinformation,andwhim.”“Ifyouwanttoknowwhat"shappeninginthemarket,askthemarket.”KennethChangJapaneseProverb Controversy,Intrigue,andConfusionWebeginbyaskingabasicquestion:Canyou,asaninvestor,consistently“beatthemarket?”Itmaysurpriseyoutolearnthatevidencestronglysuggeststhattheanswertothisquestionis“probablynot.”Weshowthatevenprofessionalmoneymanagershavetroublebeatingthemarket.Attheendofthechapter,wedescribesomemarketphenomenathatsoundmorelikecarnivalsideshows,suchas“theamazingJanuaryeffect.” MarketEfficiencyTheefficientmarkethypothesis(EMH)isatheorythatasserts:Asapracticalmatter,themajorfinancialmarketsreflectallrelevantinformationatagiventime.Marketefficiencyresearchexaminestherelationshipbetweenstockpricesandavailableinformation.Theimportantresearchquestion:isitpossibleforinvestorsto“beatthemarket?”PredictionoftheEMHtheory:ifamarketisefficient,itisnotpossibleto“beatthemarket”(exceptbyluck). WhatDoes“BeattheMarket”Mean?Theexcessreturnonaninvestmentisthereturninexcessofthatearnedbyotherinvestmentsthathavethesamerisk.“Beatingthemarket”meansconsistentlyearningapositiveexcessreturn. ThreeEconomicForcesthatCanLeadtoMarketEfficiencyInvestorsusetheirinformationinarationalmanner.Rationalinvestorsdonotsystematicallyovervalueorundervaluefinancialassets.Ifeveryinvestoralwaysmakesperfectlyrationalinvestmentdecisions,itwouldbeverydifficulttoearnanexcessreturn.Thereareindependentdeviationsfromrationality.Supposethatmanyinvestorsareirrational.Theneteffectmightbethattheseinvestorscanceleachotherout.So,irrationalityisjustnoisethatisdiversifiedaway.Whatisimportanthereisthatirrationalinvestorshavedifferentbeliefs.Arbitrageursexist.Supposecollectiveirrationalitydoesnotbalanceout.Supposetherearesomewell-capitalized,intelligent,andrationalinvestors.Ifrationaltradersdominateirrationaltraders,themarketwillstillbeefficient.Theseconditionsaresopowerfulthatanyoneofthemleadstoefficiency. FormsofMarketEfficiency,(i.e.,whatinformationisused?)AWeak-formEfficientMarketisoneinwhichpastpricesandvolumefiguresareofnouseinbeatingthemarket.Ifso,thentechnicalanalysisisoflittleuse.ASemistrong-formEfficientMarketisoneinwhichpubliclyavailableinformationisofnouseinbeatingthemarket.Ifso,thenfundamentalanalysisisoflittleuse.AStrong-formEfficientMarketisoneinwhichinformationofanykind,publicorprivate,isofnouseinbeatingthemarket.Ifso,then“insideinformation”isoflittleuse. InformationSetsforMarketEfficiency WhyWouldaMarketbeEfficient?Thedrivingforcetowardmarketefficiencyissimplycompetitionandtheprofitmotive.Evenarelativelysmallperformanceenhancementcanbeworthatremendousamountofmoney(whenmultipliedbythedollaramountinvolved).Thiscreatesincentivestounearthrelevantinformationanduseit. SomeImplicationsofMarketEfficiency:DoesOldInformationHelpPredictFutureStockPrices?Thisisasurprisinglydifficultquestiontoanswerclearly.Researchershaveusedsophisticatedtechniquestotestwhetherpaststockpricemovementshelppredictfuturestockpricemovements.Someresearchershavebeenabletoshowthatfuturereturnsarepartlypredictablebypastreturns.BUT:thereisnotenoughpredictabilitytoearnanexcessreturn.Also,tradingcostsswampattemptstobuildaprofitabletradingsystembuiltonpastreturns.Result:buy-and-holdstrategiesinvolvingbroadmarketindexesareextremelydifficulttooutperform.TechnicalAnalysisimplication:Nomatterhowoftenaparticularstockpricepathhasrelatedtosubsequentstockpricechangesinthepast,thereisnoassurancethatthisrelationshipwilloccuragaininthefuture. SomeImplicationsofMarketEfficiency:RandomWalksandStockPricesIfyouweretoaskpeopleyouknowwhetherstockmarketpricesarepredictable,manyofthemwouldsayyes.Totheirsurprise,andperhapsyours,itisverydifficulttopredictstockmarketprices.Infact,considerableresearchhasshownthatstockpriceschangethroughtimeasiftheyarerandom.Thatis,stockpriceincreasesareaboutaslikelyasstockpricedecreases.Whenthereisnodiscernablepatterntothepaththatastockpricefollows,thenthestock’spricebehaviorislargelyconsistentwiththenotionofarandomwalk. RandomWalksandStockPrices,Illustrated HowNewInformationGetsintoStockPrices,I.Initssemi-strongform,theEMHstatessimplythatstockpricesfullyreflectpubliclyavailableinformation.Stockpriceschangewhentradersbuyandsellsharesbasedontheirviewofthefutureprospectsforthestock.But,thefutureprospectsforthestockareinfluencedbyunexpectednewsannouncements.Pricescouldadjusttounexpectednewsinthreebasicways:EfficientMarketReaction:Thepriceinstantaneouslyadjuststothenewinformation.DelayedReaction:Thepricepartiallyadjuststothenewinformation.OverreactionandCorrection:Thepriceover-adjuststothenewinformation,buteventuallyfallstotheappropriateprice. HowNewInformationGetsintoStockPrices,II. EventStudies,I.Researchershaveexaminedtheeffectsofmanytypesofnewsannouncementsonstockprices.Suchresearchersareinterestedin:TheadjustmentprocessitselfThesizeofthestockpricereactiontoanewsannouncement.Totestfortheeffectsofnewinformationonstockprices,researchersuseanapproachcalledaneventstudy.Letuslookathowresearchersusethismethod.Wewilluseadramaticexample. EventStudies,II.OnFriday,May25,2007,executivesofAdvancedMedicalOptics,Inc.(EYE),recalledacontactlenssolutioncalledCompleteMoisturePlusMultiPurposeSolution.AdvancedMedicalOpticstookthisvoluntaryactionaftertheCentersforDiseaseControlandPrevention(CDC)foundalinkbetweenthesolutionandararecorneainfection.Themedicalnameforthiscorneainfectionisacanthamoebakeratitis.TheeventstudynameforthiscorneainfectionisAK.EYEExecutiveschosetorecalltheirproducteventhoughnoevidencewasfoundthattheirmanufacturingprocessintroducedtheparasitethatcanleadtoAK.Further,companyofficialsbelievedthattheoccurrencesofAKweremostlikelytheresultofenduserswhofailedtofollowsafeprocedureswheninstallingcontactlenses.OnTuesday,May29,2007,EYEsharesopenedat$34.37,down$5.83fromtheFridayclosingprice. EventStudies,III. EventStudies,IV.Whenresearcherslookforeffectsofnewsonstockprices,theymustmakesurethatoverallmarketnewsisaccountedforintheiranalysis.ToseparatetheoverallmarketfromtheisolatednewsconcerningAdvancedMedicalOptics,Inc.,researcherswouldcalculateabnormalreturns:Abnormalreturn=Observedreturn–ExpectedreturnTheexpectedreturniscalculatedusingamarketindex(liketheNasdaq100ortheS&P500Index)orbyusingalong-termaveragereturnonthestock.Researchersthenaligntheabnormalreturnonastocktothedaysrelativetothenewsannouncement.Researchersusuallyassignthevalueofzerotothenewsannouncementday.Onedayafterthenewsannouncementisassignedavalueof+1.Twodaysafterthenewsannouncementisassignedavalueof+2,andsoon.Similarly,onedaybeforethenewsannouncementisassignedthevalueof-1. EventStudies,V.AccordingtotheEMH,theabnormalreturntodayshouldonlyrelatetoinformationreleasedonthatday.Toevaluateabnormalreturns,researchersusuallyaccumulatethemovera60or80-dayperiod.ThenextslideisaplotofcumulativeabnormalreturnsforAdvancedMedicalOptics,Inc.beginning40daysbeforetheannouncement.Thefirstcumulativeabnormalreturn,orCAR,isjustequaltotheabnormalreturnonday-40.TheCARonday-39isthesumofthefirsttwoabnormalreturns.TheCARonday-38isthesumofthefirstthree,andsoon.ByexaminingCARs,researcherscanseeiftherewasover-orunder-reactiontoanannouncement. EventStudies,VI. EventStudies,VII.Asyoucansee,AdvancedMedicalOptics,Inc.’scumulativeabnormalreturnhoveredaroundzerobeforetheannouncement.Afterthenewswasreleased,therewasalarge,sharpdownwardmovementintheCAR.TheoverallpatternofcumulativeabnormalreturnsisessentiallywhattheEMHwouldpredict.Thatis:Thereisabandofcumulativeabnormalreturns,Asharpbreakincumulativeabnormalreturns,andAnotherbandofcumulativeabnormalreturns. InformedTradersandInsiderTrading,I.Ifamarketisstrong-formefficient,noinformationofanykind,publicorprivate,isusefulinbeatingthemarket.But,itisclearthatsignificantinsideinformationwouldenableyoutoearnsubstantialexcessreturns.Thisfactgeneratesaninterestingquestion:Shouldanyofusbeabletoearnreturnsbasedoninformationthatisnotknowntothepublic? InformedTradersandInsiderTrading,II.IntheU.S.(andinmanyothercountries)itisillegaltomakeprofitsonnon-publicinformation.ItisarguedthatthisbanisnecessaryifinvestorsaretohavetrustinU.S.stockmarkets.TheUnitedStatesSecuritiesandExchangeCommission(SEC)enforceslawsconcerningillegaltradingactivities.Itisimportanttobeabletodistinguishbetween:InformedtradingLegalinsidertradingIllegalinsidertrading InformedTradingWhenaninvestormakesadecisiontobuyorsellastockbasedonpubliclyavailableinformationandanalysis,thisinvestorissaidtobeaninformedtrader.Theinformationthataninformedtraderpossessesmightcomefrom:ReadingtheWallStreetJournalReadingquarterlyreportsissuedbyacompanyGatheringfinancialinformationfromtheInternetTalkingtootherinvestors LegalInsiderTradingSomeinformedtradersarealsoinsidertraders.Whenyouheartheterminsidertrading,youmostlikelythinkthatsuchactivityisillegal.But,notallinsidertradingisillegal.Companyinsiderscanmakeperfectlylegaltradesinthestockoftheircompany.TheymustcomplywiththereportingrulesmadebytheSEC.WhencompanyinsidersmakeatradeandreportittotheSEC,thesetradesarereportedtothepublicbytheSEC.Inaddition,corporateinsidersmustdeclarethattradesthattheymadewerebasedonpublicinformationaboutthecompany,ratherthan“inside”information. Whoisan“Insider”?Forthepurposesofdefiningillegalinsidertrading,aninsiderissomeonewhohasmaterialnon-publicinformation.Suchinformationisbothnotknowntothepublicand,ifitwereknown,wouldimpactthestockprice.Apersoncanbechargedwithinsidertradingwhenheorsheactsonsuchinformationinanattempttomakeaprofit. IllegalInsiderTradingWhenanillegalinsidertradeoccurs,thereisatipperandatippee.Thetipperisthepersonwhohaspurposelydivulgedmaterialnon-publicinformation.Thetippeeisthepersonwhohasknowinglyusedsuchinformationinanattempttoprofit.ItisdifficultfortheSECtoprovethatatraderistrulyatippee.Itisdifficulttokeeptrackofinsiderinformationflowsandsubsequenttrades.Supposeapersonmakesatradebasedontheadviceofastockbroker.Evenifthebrokerbasedthisadviceonmaterialnon-publicinformation,thetradermightnothavebeenawareofthebroker’sknowledge.TheSECmustprovethatthetraderwas,infact,awarethatthebroker’sinformationwasbasedonmaterialnon-publicinformation.Sometimes,peopleaccusedofinsidertradingclaimthattheyjust“overheard”someonetalking.Beaware:Whenyoutakepossessionofmaterialnon-publicinformation,youbecomeaninsiderandareboundtoobeyinsidertradinglaws. It’sNotaGoodThing:WhatdidMarthado?(Part1)TheSECbelievedthatMs.Stewartwastoldbyherfriend,SamWaksal,whofoundedacompanycalledImClone,thatacancerdrugbeingdevelopedbyImClonehadbeenrejectedbytheFoodandDrugAdministration.ThisdevelopmentwouldbebadnewsforImCloneshares.MarthaStewartsoldher3,928sharesinImCloneonDecember27,2001.Onthatday,ImClonetradedbelow$60pershare,alevelthatMs.Stewartclaimedtriggeredanexistingstop-lossorder.However,theSECbelievedthatMs.StewartillegallysoldhersharesbecauseshehadinformationconcerningtheFDArejectionbeforeitbecamepublic.TheFDArejectionwasannouncedafterthemarketclosedonFriday,December28,2001.ThisnewswasahugeblowtoImCloneshares,whichclosedatabout$46pershareonthefollowingMonday(thefirsttradingdayaftertheinformationbecamepublic). It’sNotaGoodThing:WhatdidMarthado?(Part2)InJune2003,Ms.Stewartandherstockbroker,PeterBacanovic,wereindictedonninefederalcounts.Theybothpleadnotguilty.Ms.Stewart’strialbeganinJanuary2004.Justdaysbeforethejurybegantodeliberate,however,JudgeMiriamCedarbaumdismissedthemostseriouschargeofsecuritiesfraud.Ms.Stewart,however,wasconvictedonallfourcountsofobstructingjustice.JudgeCedarbaumfinedMs.Stewart$30,000andsentencedhertofivemonthsinprison,twoyearsofprobation,andfivemonthsofhomeconfinement.Thefinewasthemaximumallowedunderfederalruleswhilethesentencewastheminimumthejudgecouldimpose.PeterBacanovic,Ms.Stewart"sbroker,wasfined$4,000andwassentencedtofivemonthsinprisonandtwoyearsofprobation.So,tosummarize:MarthaStewartwasaccused,butnotconvicted,ofinsidertrading.MarthaStewartwasaccused,andconvicted,ofobstructingjustice. AreFinancialMarketsEfficient(Part1)?Financialmarketsarethemostextensivelydocumentedofallhumanendeavors.Colossalamountsoffinancialmarketdataarecollectedandreportedeveryday.Thesedata,particularlystockmarketdata,havebeenexhaustivelyanalyzedtotestmarketefficiency.But,marketefficiencyisdifficulttotestforthesefourbasicreasons:Therisk-adjustmentproblemTherelevantinformationproblemThedumbluckproblemThedatasnoopingproblem AreFinancialMarketsEfficient(Part2)?Nevertheless,threegeneralitiesaboutmarketefficiencycanbemade:Short-termstockpriceandmarketmovementsappeartobedifficulttopredictwithanyaccuracy.Themarketreactsquicklyandsharplytonewinformation,andvariousstudiesfindlittleornoevidencethatsuchreactionscanbeprofitablyexploited.Ifthestockmarketcanbebeaten,thewaytodosoisnotobvious. SomeImplicationsifMarketsareEfficientSecurityselectionbecomeslessimportant,becausesecuritieswillbefairlypriced.Therewillbeasmallroleforprofessionalmoneymanagers.Itmakeslittlesensetotimethemarket. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,I.Let’shaveastockmarketinvestmentcontestinwhichyouaregoingtotakeonprofessionalmoneymanagers.Theprofessionalmoneymanagershaveattheirdisposaltheirskill,banksofcomputers,andscoresofanalyststohelppicktheirstocks.Doesthissoundlikeanunfairmatch?Youhaveaterrificadvantageifyoufollowthisinvestmentstrategy:Holdabroad-basedmarketindex.OnesuchindexthatyoucaneasilybuyisamutualfundcalledtheVanguard500IndexFund(thereareothermarketindexmutualfunds)ThefundtrackstheperformanceoftheS&P500IndexbyinvestingitsassetsinthestocksthatmakeuptheS&P500Index. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,II. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,III.ThepreviousslideshowsthenumberofthesefundsthatbeattheperformanceoftheVanguard500IndexFund.Youcanseethatthereismuchmorevariationinthedashedbluelinethaninthedashedredline.Whatthismeansisthatinanygivenyear,itishardtopredicthowmanyprofessionalmoneymanagerswillbeattheVanguard500IndexFund.But,thelowlevelandvariationofthedashedredlinemeansthatthepercentageofprofessionalmoneymanagerswhocanbeattheVanguard500IndexFundovera10-yearinvestmentperiodislowandstable. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,IV. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,V. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,VI.TwopreviousslidesshowthepercentageofmanagedequityfundsthatbeattheVanguard500IndexFund.Inonly12ofthe24years(1986—2009)didmorethanhalfbeattheVanguard500IndexFund.Theperformanceisworsewhenitcomestoa10-yearinvestmentperiods(1977-1986through2000-2009).Inonly5ofthese24investmentperiodsdidmorethanhalftheprofessionalmoneymanagersbeattheVanguard500IndexFund. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,VII.Theupcomingslidepresentsmoreevidenceconcerningtheperformanceofprofessionalmoneymanagers.Usingdatafrom1980through2009,wedividethistimeperiodinto:1-yearinvestmentperiodsRolling3-yearinvestmentperiodsRolling5-yearinvestmentperiodsRolling10-yearinvestmentperiodsThen,afterwecalculatethenumberofinvestmentperiods,weasktwoquestions:WhatpercentofthetimedidhalftheprofessionallymanagedfundsbeattheVanguard500IndexFund?Whatpercentofthetimedidthree-fourthsofthembeattheVanguard500IndexFund? MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,VIII. MarketEfficiencyandthePerformanceofProfessionalMoneyManagers,IX.Thepreviousslidesraisesomepotentiallydifficultanduncomfortablequestionsforsecurityanalystsandotherinvestmentprofessionals.Ifmarketsareinefficient,andtoolslikefundamentalanalysisarevaluable,whycan’tmutualfundmanagersbeatabroadmarketindex?Theperformanceofprofessionalmoneymanagersisespeciallytroublesomewhenweconsidertheenormousresourcesattheirdisposalandthesubstantialsurvivorshipbiasthatexists.Managersandfundsthatdoespeciallypoorlydisappear.Ifitwerepossibletobeatthemarket,thentheprocessofeliminationshouldleadtoasituationinwhichthesurvivorscanbeatthemarket.Thefactthatprofessionalmoneymanagersseemtolacktheabilitytooutperformabroadmarketindexisconsistentwiththenotionthattheequitymarketisefficient. WhatistheRoleforPortfolioManagersinanEfficientMarket?Theroleofaportfoliomanagerinanefficientmarketistobuildaportfoliotothespecificneedsofindividualinvestors.Abasicprincipleofinvestingistoholdawell-diversifiedportfolio.However,exactlywhichdiversifiedportfolioisoptimalvariesbyinvestor.Somefactorsthatinfluenceportfoliochoiceincludetheinvestor’sage,taxbracket,riskaversion,andevenemployer.Employer?SupposeyouworkforStarbucksandpartofyourcompensationisstockoptions.Likemanycompanies,Starbucksoffersitsemployeestheopportunitytopurchasecompanystockatlessthanmarketvalue.YoucanimaginethatyoucouldwindupwithalotofStarbucksstockinyourportfolio,whichmeansyouarenotholdingadiversifiedportfolio.Theroleofyourportfoliomanagerwouldbetohelpyouaddotherassetstoyourportfoliosothatitisonceagaindiversified. AnomaliesWewillnowpresentsomeaspectsofstockpricebehaviorthatarebothbafflingandpotentiallyhardtoreconcilewithmarketefficiency.Researcherscallthesemarketanomalies.Threefactstokeepinmindaboutmarketanomalies.First,anomaliesgenerallydonotinvolvemanydollarsrelativetotheoverallsizeofthestockmarket.Second,manyanomaliesarefleetingandtendtodisappearwhendiscovered.Finally,anomaliesarenoteasilyusedasthebasisforatradingstrategy,becausetransactioncostsrendermanyofthemunprofitable. TheDay-of-the-WeekEffect:MondaystendtohaveaNegativeAverageReturnTheday-of-the-weekeffectreferstothetendencyforMondaytohaveanegativeaveragereturn—whichiseconomicallysignificant.Interestingly,theeffectismuchstrongerinthe1950-1979timeperiodthaninthe1980-2009timeperiod. TheAmazingJanuaryEffect,I.TheJanuaryeffectreferstothetendencyforsmall-capstockstohavelargereturnsinJanuary.DoestheJanuaryeffectexistfortheS&P500? TheAmazingJanuaryEffect,II.But,whatdoweseewhenwelookatreturnsonsmall-capstocks? TheTurn-of-the-YearEffect,I.ResearchershavedeeplyexploredtheJanuaryeffecttoseewhether:theeffectisduetoreturnsduringthewholemonthofJanuary,orduetoreturnsbracketingtheendoftheyear.Researcherslookatreturnsoveraspecificthree-weekperiodandcomparethesereturnstothereturnsfortherestoftheyear.Asshownonthenextslide,wehavecalculateddailymarketreturnsfrom1962through2009.“TurnoftheYearDays:”thelastweekofdailyreturnsinacalendaryearandthefirsttwoweeksofdailyreturnsinthenextcalendaryear.“RestoftheDays:”Anydailyreturnthatdoesnotfallintothisthree-weekperiod. TheTurn-of-the-YearEffect,II.Asyoucansee,the“TurnoftheYear”returnsarehigherthanthe“RestoftheDays”returns.Thedifferenceisbiggestinthe1962-1985period. TheTurn-of-the-MonthEffect,I.Researchershavealsoinvestigatedwhethera“Turn-of-the-Month”effectexists.Onthenextslide,wehaveseparateddailystockmarketreturnsintotwocategories.“TurnoftheMonthDays:”Dailyreturnsfromthelastdayofanymonthorthefollowingthreedaysofthefollowingmonth“RestoftheDays:”Anyotherdailyreturns TheTurn-of-the-MonthEffect,II.“TurnoftheMonth”returnsexceed“RestoftheDays”returns.Theturn-of-the-montheffectisapparentinallthreetimeperiods.Interestingly,theeffectappearstobeasstronginthe1986-2009periodthaninthe1962-1985period.ThefactthatthiseffectexistspuzzlesEMHproponents. BubblesandCrashesBubble:occurswhenmarketpricessoarfarinexcessofwhatnormalandrationalanalysiswouldsuggest.Investmentbubbleseventuallypop.Whenabubbledoespop,investorsfindthemselvesholdingassetswithplummetingvalues.Abubblecanformoverweeks,months,orevenyears.Crash:significantandsuddendropinmarketvalues.Crashesaregenerallyassociatedwithabubble.Crashesaresudden,generallylastinglessthanaweek.However,thefinancialaftermathofacrashcanlastforyears. TheCrashof1929 TheCrashof1929—TheAftermath TheCrashof1987Once,whenwespokeoftheCrash,wemeantOctober29,1929.ThatwasuntilOctober1987.TheCrashof1987beganonFriday,October16th.TheDJIAfell108pointstocloseat2,246.73.FirsttimeinhistorythattheDJIAfellbymorethan100pointsinoneday.OnOctober19,1987,theDJIAlostabout22.6%ofitsvalueonanewrecordvolume(about600millionshares)TheDJIAplummeted508.32pointstocloseat1,738.74.DuringthedayonTuesday,October20th,theDJIAcontinuedtoplungeinvalue,reachinganintradaylowof1,616.21.But,themarketralliedandclosedat1,841.01,up102points. TheCrashof1987—Aftermath CircuitBreakersAsaresultoftheCrashof1987,therehavebeensomesignificantmarketchanges.OneofthemostinterestingchangeswastheintroductionoftheNYSEcircuitbreakers.DifferentcircuitbreakersaretriggerediftheDJIAdropsby10,20,or30percent.A10percentdropwillhalttradingforatmostonehourA20percentdropwillhalttradingforatmosttwohoursA30percentdropwillhalttradingfortheremainderoftheday TheAsianCrashThecrashoftheNikkeiIndex,whichbeganin1990,lengthenedintoaparticularlylongbearmarket.ItisquiteliketheCrashof1929inthatrespect.TheAsianCrashstartedwithaboomingbullmarketinthe1980s.JapanandemergingAsianeconomiesseemedtobeformingapowerfuleconomicforce.The“Asianeconomy”becameaninvestoroutletforthosewaryoftheU.S.marketaftertheCrashof1987. TheAsianCrash—Aftermath The“Dot-Com”BubbleandCrash,I.Bythemid-1990s,theriseinInternetusageanditsglobalgrowthpotentialfueledwidespreadexcitementoverthe“neweconomy.”Investorsseemedtocareonlyaboutbigideas.InvestoreuphorialedtoasurgeinInternetIPOs,whichwerecommonlyreferredtoas“DotComs”becausesomanyoftheirnamesendedin“.com.”ThelackofsolidbusinessmodelsdoomedmanyDotComs.Manyofthemsufferedhugelosses. The“Dot-Com”BubbleandCrash,II. TheCrashofOctober2008 TheDowJonesAverage,January2008throughApril2010 ChapterReview,I.FoundationsandFormsofMarketEfficiencySomeImplicationsofMarketEfficiencyDoesOldInformationHelpPredictFutureStockPrices?RandomWalksandStockPricesHowDoesNewInformationGetintoStockPrices?EventStudiesInformedTradersandInsideTradingHowEfficientareMarkets?AreFinancialMarketsEfficient?SomeImplicationsofMarketEfficiencyThePerformanceofProfessionalMoneyManagers ChapterReview,II.AnomaliesTheDay-of-the-WeekEffectTheAmazingJanuaryEffectTurn-of-the-YearEffectTurn-of-the-MonthEffectBubblesandCrashesTheCrashof1929TheCrashofOctober1987TheAsianCrashThe“Dot-Com”BubbleandCrashTheCrashof2008