ME and Ophelia

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HERD MENTALITY COULD BE DRIVING THE STOCK MARKET
Stockbrokers may act like sheep

There is a man-made system upon whose complex, poorly understood behaviour the lives of billions depend. This is no DNA-engineered super-virus, nor the simmering hydrocarbon gravy that is our atmosphere. It's the stock market.

Research reported in the journal Physical Review Letters explains the statistics of stocks and shares in terms of the flocking behaviour of brokers on the market floor. Herd mentality could be driving the fierce world of finance, a new mathematical model shows.

Trying to predict the way the market fluctuates has long been the goal of governments and financial analysts. While some countries bask in bright economic sunshine, others are thrown into turmoil -- all seemingly at the whim of chance.

© Nature News Service / Macmillan Magazines Ltd 2001 - 3 January 2001 by MARK HAW

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