From: John Conover <john@email.johncon.com>
Subject: Re: General Equilibrium Model
Date: 14 Jan 1999 02:24:08 -0000
jim blair writes:
>
> ON EQUILIBRIUM
>
> I agree that a stable system in a predictable cyclic pattern
> can be considered to be 'at equilibrium' (but often "steady
> state" is a better term).
>
Hi Jim. I just measured the maximum / minimum value in a running year
for all equities in the US markets over the last decade. It turns out
that it is very close to a factor of two, ie., in a calendar year, the
"typical" equity's value will fluctuate by a factor of two. If an
equity's value is considered a steady state equilibrium, isn't this
counter intuitive? I mean, a steady state that varies by a hundred
percent in a calendar year just seems counter intuitive to me.
It looks like currency exchange rates do something similar, but the 2X
number takes about four years. It seems like "cyclic" seems to be a
good choice of words-as opposed to periodic-since the distribution of
the cycles seems to fit a 1 / sqrt (t) type of envelope.
Sorry, but the concept of equilibrium, (at least in the traditional
sense of a physical or electronic system,) just seems counter
intuitive to me.
Maybe its just me.
John
--
John Conover, john@email.johncon.com, http://www.johncon.com/