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Strategies & Market Trends : Analysis Class for Beginners
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To: Arthur Tang who wrote (643)11/8/1997 9:00:00 AM
From: Arthur Tang  Read Replies (1) of 1471
 
How can we control volitility on Wall street? By using servo-mechanism theories, we can calulate in control technology of automation.

To correct over shoot and under damping, we have to use anticipatory formulas, which is the strong points in servo-mechanism.

The damping factor is the cash reserve in mutual funds, in large customers' accounts, and in banks of small individual customers who do not take advise from brokers.

A short cut to calulations is to anticipate equity value increase and provide ideal cash reserve by selling stocks(at the anticipated peak) before you need the cash. And to buy stocks with cash reserve after equity value pulled back( based on anticipated future gains). This provides a large stock pool and cash pool which in effect dampens the market volitility. (brokers will love this activity)

To calculate the anticipated equity value, you look at the input of investment to Wall street (future value of indexes) as well as the cash reserve average on Wall street(index pull back calculation). (nothing new, but has to be adjusted hourly)

Do you have to study servo-mechanism and the formulas. It helps, but if you understand how to anticipate; you can get by adequately, hourly but not monthly or yearly.
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