Comp II
Assignment 4: Research Essay
Assignment Description
For this assignment, you are required to research a topic of your choice and produce a 4-6 page
essay reflecting what you have learned. The topic is open – but think about:
Is it something you are genuinely interested in? Is it something you have wondered about
in the past? Would you like to know more about a topic you are already engaged in?
Are you open to learning about your topic or have you already determined how you
stand? This paper should offer the chance for you to grow and stretch your views. For
this reason, it is inadvisable to choose topics like gun control, legalizing marijuana, etc.
Be creative in your topic choice.
Do you have access to enough information (primary and/or secondary research) to write a
paper on your topic?
Your job as the writer is to help your reader understand your point of view regarding the topic
and that takes lots of support from outside of yourself.
Research
For this essay you must use at least four scholarly secondary sources
(journals/databases/books/chapters). You may also add pop-culture sources, primary research
(interviews), and any other material that serves to explore your topic. Remember: it is important
to also use sources that do not agree with your thesis as this shows you understand the
conversation surrounding your topic. It will be your job then to refute the “nay-sayers” in your
essay.
Your paragraphs should not be one source/one paragraph. Synthesize your sources to strengthen
your points. Your research should result in a clear conclusion based on the analysis of the
evidence/research you incorporated into your essay.
The Steps:
1. Annotated Bibliography: This paper will begin with an annotated bibliography, which
contains descriptive and evaluative comments on all sources you have chosen to
incorporate in to your Research Essay.
2. Pre-Writing: You will turn in pre-writing/brainstorming ideas to your instructor.
3. Draft: The final turned in essay should never be your first draft. You will be required to
turn in at least one draft and conference your paper.
4. Final Draft
Format
MLA Format. 12pt. Times New Roman. Double spaced.
(my topic):Title: Unraveling Stock Market Dynamics and Long-Term Investment Strategies
Introduction:
As someone deeply immersed in the world of trading and finance, I’ve always been fascinated by the ever-changing landscape of the stock market. In this research paper, I delve into the complexities of stock market behavior and explore the effectiveness of long-term investment strategies in navigating its uncertainties.
Key Points:
The Unpredictable Nature of the Stock Market
Theories of Efficient Market Hypothesis and Random Walk Theory
Long-Term Investment Strategies
Body of Paper:
1. The Unpredictable Nature of the Stock Market:
Despite our reliance on traditional methods, such as P/E ratios and Moving Averages, the stock market often surprises us with its unpredictable behavior.
Historical events like the 2008 financial crisis are stark reminders of the market’s unpredictability, challenging conventional techniques.
The market’s behavior during the 2008 crisis exposed the limitations of our forecasting tools, shaking investors’ confidence in their ability to predict market movements accurately.
Unique phenomena like the January and Momentum effects further complicate our understanding of market behavior, making it difficult to rely solely on historical data.
1. Theories of Efficient Market Hypothesis and Random Walk Theory:
Malkiel’s Efficient Market Hypothesis suggests that stock prices already reflect all available information, questioning the notion of consistently outperforming the market.
Fama’s Random Walk Theory further undermines our confidence in predicting stock price changes, highlighting the randomness of market movements.
These theories prompt us to reconsider the reliability of traditional forecasting methods and the effectiveness of our investment strategies, broadening our understanding of market dynamics and their challenges to investors.
1. Long-Term Investment Strategies:
Siegel’s research shows the importance of adopting a patient, long-term buy-and-hold approach to investing, emphasizing the benefits of compounding returns over time.
Long-term investors enjoy the advantages of compounding returns, significantly enhancing their investment outcomes.
By embracing a buy-and-hold strategy, investors can better withstand short-term market fluctuations and capitalize on long-term growth opportunities. Patience and resilience are key attributes of successful long-term investors.
Siegel’s insights encourage us to reevaluate our investment strategies and prioritize long-term wealth accumulation over short-term gains.
1. Summary Paragraph:
In summary, this research paper explores the complexity of stock market behavior and the importance of adopting long-term investment strategies to navigate its unpredictability effectively.
The stock market’s unpredictable nature challenges conventional forecasting techniques and calls for a more nuanced understanding of market dynamics.
Malkiel and Fama’s theories prompt us to rethink our approach to investing and acknowledge the limitations of our predictive abilities.
Siegel’s research highlights the benefits of patience and resilience in achieving long-term investment success, guiding us toward a more sustainable and profitable investment approach.
Conclusion:
The stock market clearly presents both challenges and opportunities for investors. By incorporating insights from various theories and embracing a long-term investment mindset, we can confidently navigate market fluctuations and achieve our financial goals.
Reference Page:
Malkiel, B. G. (2008). Efficient Market Hypothesis. The New Palgrave Dictionary of Economics, 2nd ed.
Fama, E. F. (1965). Random Walks in Stock Market Prices. Financial Analysts Journal, 21(5), 55-59.
Siegel, J. J. (2014). Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies. McGraw-Hill Education.
Taleb, N. N. (2007). The Black Swan: The Impact of the Highly Improbable. Random House.
Annotated Bibliography
Malkiel, Burton G. “Efficient Market Hypothesis.” The New Palgrave Dictionary of Economics, 2nd ed., edited by Steven N. Durlauf and Lawrence E. Blume, Palgrave Macmillan, 2008.
Malkiel’s exploration of the Efficient Market Hypothesis (EMH) provides a good overview of a theory that’s central to understanding stock market behavior. The EMH suggests that stock prices incorporate all available information, challenging investors’ abilities to consistently outperform the market. Malkiel, a respected economist, offers valuable insights into the challenges investors face, prompting readers to rethink traditional methods of predicting market trends. This source serves as a core piece in my research, helping me grasp the complexities of market predictability and develop arguments around the limitations of conventional investment strategies.
Fama, Eugene F. “Random Walks in Stock Market Prices.” Financial Analysts Journal, vol. 21, no. 5, 1965, pp. 55-59.
Fama’s seminal paper on random walks in stock market prices changed the understanding of market behavior. He argues that stock price changes follow a random pattern, challenging the notion of predictable market trends. This piece of finance literature is highlighting the complexities of short-term market predictions and the limitations of traditional investment strategies. By incorporating Fama’s insights, I aim to strengthen my thesis on the unpredictability of the stock market and the importance of long-term investment approaches for navigating market volatility.
Siegel, Jeremy J. Stocks for the Long Run: The Definitive Guide to Financial Market Returns & Long-Term Investment Strategies. McGraw-Hill Education, 2014.
Siegel’s book is a must-read for anyone interested in long-term investment strategies. Drawing on extensive historical data, Siegel demonstrates the effectiveness of patience and a buy-and-hold approach in achieving good investment returns. His work provides valuable insights into the benefits of long-term investing and its relevance in mitigating market unpredictability. Incorporating Siegel’s perspectives strengthens my argument on the advantages of long-term investment strategies in navigating the uncertain nature of the stock market.
Taleb, Nassim Nicholas. The Black Swan: The Impact of the Highly Improbable. Random House, 2007.
Taleb’s exploration of black swan events challenges conventional notions of predictability in financial markets. He argues that rare and unpredictable events have significant impacts, often overlooked by traditional risk models. This book provides a critical perspective on the limitations of relying solely on historical data in forecasting market behavior. Taleb’s insights showcase the importance of adaptability in investment decisions.
Topic:
For my research topic, I will be diving into the stock market’s unpredictable nature and ever-changing complexities. With hopes of a future career in trading after I graduate and my active involvement in trading the market, I’ve grown fascinated by the market’s constant changing and shifting dynamics. What intrigues me most is its unpredictability, challenging even the most professional investors. I want to learn why our traditional methods of predicting market trends often miss the mark. Additionally I want to understand its complexity and help others around me understand this major economic puzzle to make better investment decisions.
Interest
The stock market isn’t just about numbers and graphs; it’s much more, its complexity involves a realm of all real-world implications. Witnessing how unpredictable market fluctuations impact economies and individuals’ financial well-being has caught my curiosity. I Personally have dedicated significant time to studying market trends, strategies, and statistics, However there are always moments when the market’s new and changing behavior leaves myself and others puzzled. Ultimately, this fuels my objective for this research paper, to unravel the mysteries behind market unpredictability and its relevance in shaping proper investment decisions.
My Approach:
My aim is to challenge conventional investment wisdom and explore other diverse perspectives. For example, rather than aligning with a specific viewpoint, I intend to look into all the complexities of market behavior. Analyzing historical market data, questioning the reliability of standard techniques, and exploring alternative viewpoints will be central to my research. Additionally, I plan to evaluate the effectiveness of long-term investment strategies in the market.
Planned Sources:
To support my research, I’ll draw insights from various reputable sources. Books authored by renowned experts such as Nassim Nicholas Taleb, a trading expert who offers valuable insights into market dynamics. Additionally, I’ll explore well-researched articles from trusted finance publications to gain diverse perspectives. Furthermore, I will look into studies focusing on long-term investment strategies that will complement my study of market unpredictability.
Initial Insights from Sources:
Initial findings from my research highlight the complex nature of market unpredictability. Events like the 2008 financial crisis show that the usual methods of guessing often don’t work. Market tools like P/E ratios and Moving Averages, which many people use a lot of time, but they don’t give accurate predictions. I’ve also learned about market patterns like the January Effect and Momentum Effect, which add more complexity to predicting its behavior.
Complementing market unpredictability, my initial research into long-term investment strategies reveals promising insights. Taking a patient, buy-and-hold approach can often yield better results than attempting to time the market. Long-term investors benefit from compounding returns and are better positioned to weather market volatility.
In summary, my research paper aims to unravel the mysteries of stock market unpredictability while exploring the effectiveness of long-term investment strategies. Through my findings of diverse perspectives, I aim to contribute to a deeper understanding of the market dynamics and help people make better decision-making in the financial world.
