X-Message-Number: 29919
From: David Stodolsky <>
Subject: Misdirected Attention and the Diluted Value of Stock Market R...
Date: Sat, 13 Oct 2007 16:15:34 +0200

http://ideas.repec.org/p/pra/mprapa/4912.html

Loonies Under Your Bed: Misdirected Attention and the Diluted Value  
of Stock Market Reports

Many people pay attention to media reports of the US stock market's  
performance. Using a data-based thought experiment, we cast the  
market's recent highs and lows in an unusually unattractive light.  
The result matters because the economic and political factors that  
make it relevant are likely to continue. Using research in economics  
and psychology, we explain why so many investors and media reports  
are blind to the unattractive interpretation. To mitigate the  
blindness' harmful consequences, we propose an alternate way of  
presenting stock market information. The alternative is easy to  
implement and can help citizens draw important inferences from the  
attention they already pay to financial reports. The word  loonies   
refers to Canadian dollars, which play a key role in our analysis.  
Loonies are not causal of any of the key relationships in our  
analysis, but provide a useful device for making a broader point  
about key US asset values.


dss


David Stodolsky    Skype: davidstodolsky

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