In Chapter 15, Larry Harris takes us away from the public exchange and into the “Upstairs Market.” If you want to buy 500,000 shares of a stock, you don’t just dump a market order into your app—you’d move the price 10% against yourself before the order was half-finished.
Chapter 5 is where Harris gets into the actual plumbing. You know how in previous chapters we talked about types of traders and types of orders? Now we are looking at the arena where all that happens. Market structure. The rules, the systems, and the “who gets to trade with whom” part.
Chapter 5 of Hilpisch’s book is called “Normative Finance.” And it opens with a quote from Fama and French admitting that the CAPM is built on “many unrealistic assumptions.” That’s a bold way to kick things off. Basically saying: here are the theories that shaped modern finance, and by the way, they don’t quite match reality.
This is the final chapter of Part II, and Rand pulls out every stop. It’s a train ride, a philosophy lecture, a mystery reveal, and a plane crash. It’s also the chapter that finally answers the question the whole book has been asking.
Chapter 4 covered the history of personality theory. Now in Chapter 5 of Behavioral Finance and Investor Types, Michael Pompian moves to the practical side: how do you actually test for personality? Because having a theory is nice, but you need a way to measure it. And that’s what this chapter is about.
Book: Trading and Exchanges: Market Microstructure for Practitioners Author: Larry Harris Publisher: Oxford University Press, 2003 ISBN: 0-19-514470-8
This is post 20 of 23 in a series on “Systems Thinking: Managing Chaos and Complexity” by Jamshid Gharajedaghi (ISBN 978-0-7506-7973-2).
Previous: Chapter 2 Part 2
You survived your own ego in Chapter 2. Good job. But here’s the problem. Even if you fix your overconfidence, your environment can still ruin your investing decisions. Chapter 3 of Tim Richards’ book is all about situational finance. The idea that the world around you pushes you into decisions you think are your own.
Book: Financial Markets and Institutions, 11th Edition Author: Jeff Madura Publisher: Cengage Learning, 2015 ISBN: 978-1-133-94788-2
Chapter 4 explained how the Fed is set up and what tools it uses. Chapter 5 goes deeper into how those tools actually affect the economy. This is where it all comes together: money supply changes flow through to interest rates, which affect borrowing, which affects spending, which affects jobs and prices.
Chapter 9 is where Travers shifts from talking about investment analysis to something most people overlook: the boring operational stuff that actually prevents you from losing all your money to fraud.