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News Link • Economy - Economics USA

Mimicry Presages Market Crashes

• arclein
s previous research has shown, investors can often benefit from using a trend-following strategy - that is, buying or selling a stock based on the recent performance of other stocks (which is not necessarily based on any fundamental value). Mimicry is high when many stocks move up or down together, which provides a potential point of origin of self-induced market-wide panic.

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