Does the Universe Move in Waves

Stephen Todd Walker

Chapter 1 in Understanding Alternative Investments, 2014, pp 23-42 from Palgrave Macmillan

Abstract: Abstract Besides the exploration of alternative investments and how they move in waves, Understanding Alternative Investments reviews how occurrences in nature, such as waves, can be used in finance. That is, the study of waves can be used for additional knowledge about investing in alternative investments. Ocean waves are generated by wind energy: “Wind energy is imparted to the sea surface through friction and pressure, causing waves. As the wind gains strength, the surface develops gradually from flat and smooth through growing levels of roughness. First, ripples form, then larger waves, called shop. The waves continue to build, their maximum size depending on three factors: wind speed, wind duration, and the area over which the wind is blowing, called the fetch.”1 Years ago, I was vacationing in Avalon, New Jersey, for the summer. Sitting on the beach, staring out at the ocean, I pondered how waves never stopped rolling in; they are incessant. Moreover, they could change direction, speed, and height in an instant. They were also influenced by the weather and other events. No wave is ever the same, but they share similarities. For example, I noticed the curve of a wave was not too different from any of the shells at my feet. Surfers love this curve, called the “barrel.” While it seemed far-fetched at the time, I wondered if these patterns or cycles could be broken down into mathematical equations. I thought of how these waves were calm but could suddenly turn into rogue waves, not too different from the storms on Wall Street, otherwise known as recessions or depressions. I was convinced that nature might teach us something about investing.

Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-37019-8_2

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DOI: 10.1057/9781137370198_2

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