The Secret Science of Stock Symbols
By Adam Alter
In each case, the more fluent concept seems more familiar, less risky, less threatening, and more trustworthy—and the same is true of stocks and, more broadly, of economic decisions.
By the end of their first day of trading, Midcoast, Springleaf, 58.com, and OCI had risen in value, whereas Essent, Brixmor, Mavenir, and Twitter had fallen. At first it’s hard to discern a difference between the early appreciators and the early depreciators. Many experts argue that it’s impossible to reliably forecast stock prices in the short run. In his classic 1973 guide to investing, “A Random Walk Down Wall Street,” the Princeton economist Burton Malkiel famously claimed that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.” Investors, Malkiel argued, were at the mercy of the markets, and though prices generally rise in the long run, it’s impossible to beat the market reliably and consistently. Malkiel’s book has sold more than a million copies.
Read the full article as published in The New Yorker.
Adam Alter is an Assistant Professor of Marketing with affiliated appointment in the Psychology Department.
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