 PARADOXES OF MODERN STOCK EXCHANGE MARKETSGheorghe Ciobanu () and
Ioana Cristina Sechel
Annals of Faculty of Economics, 2013, vol. 1, issue 1, 89-96 Abstract: In this article we propose an easy approach of stock exchanges and their impact on the real economy. The paradoxes of modern stock exchanges are commonly understood as opinions that contradict the generally accepted truth and therefore are considered absurdities or huge enormity by the majority of the population. The paradoxes are essentially based on logical arguments that sometimes can lead to contrary or contradictory conclusions (depends on the situation) of a truth already known and accepted. In connection with capital market, through this approach we try to highlight a few aspects that come out from everyday life, breaking the monotony of theoretical resolutions. We can associate anomalies in trading financial instruments with prove that financial markets are inefficient. They can be highlighted best on the developed financial markets. Through their specific, there are anomalies in a stock market that demonstrates either that the market is inefficient or that there are some discrepancies regarding certain asset price formation. If we talk about market inefficiency hypothesis, it is demonstrated that in that market, the efficiency of the market is not verified or partially verified. It has been shown that such anomalies tend to diminish or even disappear in time, thereby reducing or even eliminating the profit opportunities of the investors who speculate on them (Schwert, 2003, p 940). The stock exchange anomalies, especially those with a direct impact on the financial instruments price which are traded on stock exchanges, are likely to offer investors the opportunity to obtain above-average market gains, in term of a proper management. To assess whether or not the phenomenon can be considered as a stock market anomaly, it must be compared with a normal behavior or with a normal model. In addition to the main categories of stock market anomalies that we identified (calendar, technical or fundamental) a paradox of recent years in the investment in stock market is the high-frequency trading (HFT - high-frequency trading), this requires a ultra-fast trading of the securities, using special algorithms but also highly advanced technologies. The effects of very rapid extension of these practices are reaping huge profits in fractions of time increasing fraction of time here, and more than that the pronounced weakening of the link between the stock market and the real economy. Keywords: stock market paradox; high-frecquency trading; january effect; weekend effect (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ora:journl:v:1:y:2013:i:1:p:89-96 Access Statistics for this article More articles in Annals of Faculty of Economics from University of Oradea, Faculty of Economics Contact information at EDIRC. |
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