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View Full Version : Is this a theory?or just some1's words?


Nadia2006
Nov 21st, 2006, 09:33 PM
I once read somewhere that if people are positive towards certains shares (in the share market), they will go out and buy it and hence that share will do well. I dont know if any1 has heard of it :S

I'd like to read more about it but cant find anything, does any1 know if its a theory of some kind? or just something some1 said?

BUBI
Nov 21st, 2006, 09:50 PM
:haha::weirdo:

Nadia2006
Nov 21st, 2006, 10:17 PM
:haha::weirdo:

The example is based on Rotter(1954)'s Social Learning Theory. Rotter's conception of 'generalised expectancies' can be explained as 'the probability held by the individual that a particular reinforcement will occur as a function of a specific behaviour on his part in a specific situation or situations'.

Basically, he advocates that the potential to behave is some function of the expectancy regarding a favourable outcome of that behaviour, and the value of the outcome of that behaviour.

You can relate the share market example to this.

Next time please do not make fun of someone just because you do not understand them.

Paul.
Nov 21st, 2006, 10:20 PM
The example is based on Rotter(1954)'s Social Learning Theory. Rotter's conception of 'generalised expectancies' can be explained as 'the probability held by the individual that a particular reinforcement will occur as a function of a specific behaviour on his part in a specific situation or situations'.

Basically, he advocates that the potential to behave is some function of the expectancy regarding a favourable outcome of that behaviour, and the value of the outcome of that behaviour.

You can relate the share market example to this.

Next time please do not make fun of someone just because you do not understand them.

stick that in ya pipe and smoke it Anna C :lol:

quasar
Nov 21st, 2006, 11:29 PM
Not that knowledgeable abour finance, sociology or economics, but, since I did stay at a Holyday-Inn last night, I'll chime in. :)

People invest in the stock market in hopes of obtaining a financial gain. If you expect certain company's shares to go up (because it just came out with a revolutionary product, earnings are expected to surpass market expectations...), it will make sense for you to buy them. If many people follow this trend (based on your same reasoning, or as an example of mob behavior), the sudden demand should allow the share price to appreciate in the short term (the interaction of supply and demand for a certain good being a key determinant of its price).

However, in the long term, the company's fundamentals--leverage, competitive position in the market, quality of management...--as well as the industry's and overall economy's performance, should be the key determinants of a stock's market valuation--rather than people's short term expectations.

Behavior-wise, I think you could analogize this to a movie opening. If early buzz is favorable, people will flock the theaters during opening weekend (short term). Afterwards, when information spreads more amply and educated decisions are more easily forthcoming, if everyone realizes that the underlaying product--be it a movie or a company--is not as good as initially expected, box office recipes--or stock prices--will be driven down, i.e., short term, a certain behavior can be possitively reinforced by social dynamics and risk-reward perceptions mostly due to the abscence of quality information (leading to a self-fulfilling prophecy) but, in the long term, people will be armed with better information, allowing for individual decisions--rather than "mob-induced"-- to predominate over collective-based ones.

Hope that made any sense...

Cheers,

Carlos

BUBI
Nov 22nd, 2006, 12:20 AM
The example is based on Rotter(1954)'s Social Learning Theory. Rotter's conception of 'generalised expectancies' can be explained as 'the probability held by the individual that a particular reinforcement will occur as a function of a specific behaviour on his part in a specific situation or situations'.

Basically, he advocates that the potential to behave is some function of the expectancy regarding a favourable outcome of that behaviour, and the value of the outcome of that behaviour.
Of course it is. I don't think anyone will disagree with this.

You can relate the share market example to this.

Next time please do not make fun of someone just because you do not understand them.
Perhaps you should learn to express yourself better. You state a grossly obvious fact and then ask if anyone has heard of it or if it's a theory :lol:

Nadia2006
Nov 22nd, 2006, 01:26 AM
Not that knowledgeable abour finance, sociology or economics, but, since I did stay at a Holyday-Inn last night, I'll chime in. :)

People invest in the stock market in hopes of obtaining a financial gain. If you expect certain company's shares to go up (because it just came out with a revolutionary product, earnings are expected to surpass market expectations...), it will make sense for you to buy them. If many people follow this trend (based on your same reasoning, or as an example of mob behavior), the sudden demand should allow the share price to appreciate in the short term (the interaction of supply and demand for a certain good being a key determinant of its price).

However, in the long term, the company's fundamentals--leverage, competitive position in the market, quality of management...--as well as the industry's and overall economy's performance, should be the key determinants of a stock's market valuation--rather than people's short term expectations.

Behavior-wise, I think you could analogize this to a movie opening. If early buzz is favorable, people will flock the theaters during opening weekend (short term). Afterwards, when information spreads more amply and educated decisions are more easily forthcoming, if everyone realizes that the underlaying product--be it a movie or a company--is not as good as initially expected, box office recipes--or stock prices--will be driven down, i.e., short term, a certain behavior can be possitively reinforced by social dynamics and risk-reward perceptions mostly due to the abscence of quality information (leading to a self-fulfilling prophecy) but, in the long term, people will be armed with better information, allowing for individual decisions--rather than "mob-induced"-- to predominate over collective-based ones.

Hope that made any sense...

Cheers,

Carlos

Hey
that made a lot of sense, thanks a lot. so its basically people making decisions when they are faced with uncertainty, and they get favourable outcomes thats good, but if not, then they stop making that certain decision. So its more of an instrumental value than substantive validity?

Nadia2006
Nov 22nd, 2006, 01:30 AM
Of course it is. I don't think anyone will disagree with this.

Perhaps you should learn to express yourself better. You state a grossly obvious fact and then ask if anyone has heard of it or if it's a theory :lol:


I didnt have enough information on it, thats why I put it up in the forum so any1 who knows better can help, just like quasar did. Thats what forums are for. If you dont think you can be helpful, then the least you can do is ignore the question. Anyways, I will be getting back to my coursework, I hope you can also do something more constructive rather than make fun of questions that you have no answer to. Have a good day!