Forest Nelson and several academics from the University of Iowa were sitting down to lunch in March of 1988, just after the Michigan Democratic caucus. Michael Dukakis had been predicted to beat Jesse Jackson by a landslide. Instead, Jackson easily pulled off a startling upset. “One of the other two guys said, ‘Boy, if the futures markets in Chicago did as bad a job of predicting the November price of corn as those opinion polls did of predicting the very next day’s election, then those markets wouldn’t exist,’” recalled Nelson, an economics professor still at the university. ... Read More
Smoggy Days Make for Sickly Stock Market
February 8, 2011 • By • Leave a Comment
Stock prices have been on the rise, tempting cautious investors to plunge back into the market. If you are one of them, you might consider this unconventional piece of advice: Buy low, sell smoggy. That’s the implication of a study conducted by two Israeli scholars published in the Journal of Economic Psychology. They report poor air quality in the vicinity of the trading floor "is negatively related to stock returns, even when controlling for other variables." Tamir Levy of Netanya Academic College and Joseph Yagil of Haifa University note that exposure to polluted air can trigger ... Read More
Robert Shiller Is Running for the Entrances
April 9, 2009 • By • 3 Comments
Yale economist Robert Shiller has a well-deserved reputation for a measure of prescience, especially when it comes to financial bubbles. He warned against the Internet-based stock bubble (witness his book Irrational Exuberance) and was among the earliest counseling caution about the recently popped real estate bubble (see his The Subprime Solution: How Today's Global Financial Crisis Happened, and What to Do about It). His record benefits from Shiller's long-held skepticism about the theory of efficient markets, long the conventional wisdom in the economics profession. Instead, he harvests ... Read More
