One claim in the paper is that 1$ of flow results in 5$ of market cap increase. And I was kind of wondering where the flow is coming from because every buyer needs to have a seller.
Turns out, they thought is about it too. So for the inelastic market hypothesis they created a new model to get around the problem of "for every buyer there is a seller".
If the paper was really important, we should have heard about it before because it's been out there for a couple years atleast. Hadn't heard about it till yesterday in the Michael Green podcast.
Turns out, they thought is about it too. So for the inelastic market hypothesis they created a new model to get around the problem of "for every buyer there is a seller".
i don't know. probably the model is wrong. But will need to study the paper more.In this final section, we construct a new measure of capital flows into the stock market consistent
with the theory in Section 3. While our theory provides conceptual clarity in terms of how to
measure flows into the market, and to get around the problem that “for every buyer there is a
seller,” the data required are unfortunately not available for all investors.
In Section 4.4, we propose a way to construct an empirical counterpart to the measure based
on the available data. As this measure is new to the literature, we show its connection to prices,
macroeconomic variables, and beliefs. The results in this section provide an initial analysis of the
potential determinants of flows into the aggregate stock market. These results are intentionally
descriptive in nature and understanding the primitive drivers of these flows is an important task
for future research.
If the paper was really important, we should have heard about it before because it's been out there for a couple years atleast. Hadn't heard about it till yesterday in the Michael Green podcast.
Statistics: Posted by SB1234 — Mon Apr 29, 2024 8:11 pm — Replies 1 — Views 117