New. Laws. of. Capital. Market
by Charlie Q. Yang, Ph.D.
The general understanding of the financial industry has been that return and risk are real and fundamental. Therefore we have been so used to and positive for any description of the capital market by Nobel Prize-winning economics works. That led us to believe that the modern portfolio theory and related academic research are true descriptions of the market.
If we have observed the stock market movements more in-depth and long enough, many of us have seen evidence that return and risk (standard deviation) are not fundamental. They are derived or emergent concepts. We all know what temperature means. It measures something as hot or cold. Scientific discoveries taught us that temperature is just an emergent idea and the fundamental idea is the motions of atoms.
Law of Benefit
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Law of Value
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Law of Market
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Law of Growth
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'In the short run, the market is a voting machine but in the long run, it is a weighing machine.'
- Benjamin Graham