ECONOMIC AND MATHEMATICAL MODELING OF FINANCIAL BUBBLES IN FINANCIAL MARKETS
Journal Title: Международный научный журнал "Интернаука" - Year 2018, Vol 2, Issue 21
Abstract
This article explores the concept of a financial bubble, gives possible reasons for the abnormal growth in asset prices, and hence the formation of a financial bubble. The object of the study is pricing in the financial market. The subject of study is the economic and mathematical models for predicting financial bubbles in the financial market. The financial bubble is the conventional name of the phenomenon, in which in a certain market or in its segment the value of one or another asset significantly exceeds the fundamental value. Fundamental cost is an estimate of the income that the owner of the asset will receive in the future. The possible consequences of the destruction of the financial bubble are considered, and the names of the known bubbles are given, which have already collapsed. Forecasting the moment of collapse of a financial bubble is important. For investors who are not willing to take risks, the forecast will help to avoid significant potential losses, and if the investor is risk-taking, then waiting for the moment of collapse will help build an investment strategy that will bring maximum profit. Based on the analysis and empirical research, the author developed a model for the development of a financial bubble. The model’s performance is shown by the example of dotcom bubbles and in the price of Qualcomm Incorporated shares. The results of the author's model were compared with the results of the model with logoperiodic Sornnett oscillations for dotcom bubbles. According to the author's model, the moment of the crash was predicted 6 days earlier than the real one, and according to the weed model 12 days after.
Authors and Affiliations
Vasyl Makarus
Keywords
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