Friday, November 04, 2005

Stock Entropy

Thinking about how the diminished presence of certain American investors from TSE during American holidays results in reversion (if only briefly), it seemed to me that finance needs an enhanced vocabulary to more accurately describe such phenomena as they relate to stocks. My contributions to the financial lexicon are below:

ENTROPOLOGY - The scientific study and explanation of the origin and behaviour of stock prices that move in ways that are likely to be contrary to what they would in the absence of those certain participants actions, and analysis of the participants actions and motivations.

PRICE ENTROPY - The tendency for the prevailing price of a stock to do what it would otherwise do in the absence of a minority of traders/investors actions that causes it do what it does.

ENTROPOLIBRIUM - The likely price at which a stock will comfortably rest at in the absence of the accumulation or disposal of the largest marginal participant.

SOCIAL ENTROPOLOGY - The study of investor group activity and upon PRICE ENTROPY and a security's ENTROPOLIBRIUM.

CULTURAL ENTROPOLOGY - The particular study and analysis of how ENTROPOLIBRIUM varies across market and cultures to behavioural biases, investor preferences and the relative proportions of momentum traders and value investors.

ENTROPOMORPHISM - The attribution of a stocks deviation from ENTROPOLIBRIUM to a single human investor or small group of investors acting in concert rather than to the anonymous perfection of the archetypical inanimate & democratic market.

ENTROPOMETRY - The study, by precise scientific and statistical measurement, of all things entropological.

VOLATROPOTILITY - A measurement of the variability of deviations from Price Entropy.

(Further entries welcome)

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