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Momtchil Pojarliev
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Some Like It Hedged

BNP Asset Management's Pojarliev discusses a variety of options to address foreign currency exposures. Although there is no single best-practice solution for addressing foreign currency exposures, institutional investors have three main choices, he says.

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March 1, 2003

Trading As Psycho Finance

By Kathryn M. Welling

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Woody Dorsey has been writing Market Semiotics from the rural remove of Castleton, Vermont since 1985, for an increasingly addicted, if not-exactly immense, coterie of a very special subset of institutional investors - ones who haven't swallowed the efficient market theory hook, line and sinker.

But Woody, and the iconoclastic brand of behavioral market research he's developed over the years, are about to burst before a larger audience when Texere this spring publishes "Behavioral Trading," his just-finished book. It is as if, like a well-aged Bordeaux, says Woody, he is ready to be consumed in prime time. And why not? If a behavioral psychologist can be awarded the Nobel Prize in Economics, a behavioral trader deserves a hearing. -KMW

Just what is "behavorial trading," or "market semiotics?"

Essentially, semiotics means diagnosis. In a way, it refers to what everybody's trying to do-diagnose the market or figure it out. Originally, the ancient Greeks organized their thoughts on medicine into what they called "semiotics," or a way of looking at their patients' symptoms and categorizing or deconstructing medicine.

Isn't it more often used these days in the analysis of language?

Yes, but I was introduced to the word when I came across the work of Harvard economist Joseph Schumpeter, who is famous for articulating the theory of creative destruction in the tomes he wrote about the business cycle. Schumpeter said, "Look, we're trying to figure out the business cycle, the capital market process. So just like the Greeks did, let's come up with a symptomology. Let's look at trade, capital flows, interest rates." In our case the patient is the capital markets.

Your ideas have evolved into a contrarian approach to the markets that depends very heavily, I gather, on proprietary ways you've developed to measure sentiment?