Category: Finance

Dr. Antonios Antoniou: Behavioural Finance Part 1

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Behavioural Finance

Chief Executive Officer of Finance, Research, Training, and Consulting, Dr. Antonios Antoniou demonstrates a long and productive history of financial research. He has served in academics, consulting, and as a respected author of multiple published financial articles, sharing knowledge gleaned from his research. One of the areas of research on which Dr. Antoniou focuses is behavioural finance.

The social sciences study human behaviour and the effects it has on the way people live their lives. Behavioural finance provides study into the specific area of how psychology affects financial behaviours, as well as the effects that those behaviours have on financial markets. Such knowledge may help provide an understanding of anomalies that occur in securities trading around the world. Most financial theory is based on rational and logical behaviour; however, human beings often defy logic and rationality. Behavioural finance seeks to create models for market fluctuations driven by emotion. For instance, logic dictates that gambling favors the house. A non-behavioural financial model might then posit that most people would not turn to gambling as a financial strategy; however, as many people who buy lottery tickets, attend horse races, or spend significant amounts of time in casinos can attest, gambling for some provides their main retirement plan. Human psychology is the only way to explain this anomaly.

Many common anomalies are attributable to behavioural finance. For instance, the January effect describes the facts that small firms often have a higher rate of return in January than any other month of the year. Another is the winner’s curse, in which winning auction items tend to exceed their intrinsic value. This may be attributable to competitiveness and the desire to win.


Euro Zone Economy Sluggish Despite Growth Measures

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Euro Zone Economy

Dr. Antonios (Tony) Antoniou has a background as finance professor with Durham University, where he was responsible for oversight of strategic planning and curriculum development within the Business School. With a longstanding interest in economic prosperity and the globalization process, Dr. Antonios Antoniou follows economic development trends among Euro currency-linked countries.

With the European Union having been buffeted by a number of crises, from Greece’s debt issues to an influx of refugees from war-torn Syria, the 19-strong Eurozone is continuing to experience low growth. A February 2016 Economist survey noted that GDP still lagged behind pre-financial crisis 2008 levels, while the U.S. economy had surged ahead by 10 percent.

The Economist painted this as particularly dire, considering the positive effect that an oil price collapse had had in driving consumer spending growth, which is seen as a pathway toward recovery. Eurozone sluggishness has also resisted measures by the European Central Bank to spark growth through a policy of negative interest rates and quantitative easing, which involves printing money to purchase financial assets. Despite these macro-level efforts, stock markets are unsure of their footing, and exports of key products to emerging markets (for example, German luxury cars to China) have been dwindling.

The European Commission Invests in Cross-Border Cooperation Programs

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European Union

A consulting executive at Financial Research, Training & Consulting, LLP, Dr. Antonios (Tony) Antoniou specializes in financial guidance for medium-sized businesses. A former economics and finance professor, Dr. Antonios Antoniou enjoys staying abreast of issues impacting the European economy.

As of 2013, a majority of Europe’s wealth was held by citizens residing in Germany, the United Kingdom, France, and Italy. In fact, the countries possessed 73 percent of continent’s wealth, while countries, such as Greece and Spain dealt with gross domestic product contractions of negative 22 percent and 6 percent, respectively.

To enhance regional development and limit wealth gaps, the European Commission announced its use of cross-border cooperation programs in 2016. Intended for roll-out in 27 European countries, the programs will finance projects that target poverty prevention, environment change, education, border management, and energy, among others. Funding will come from the European Regional Development Fund, from which the commission has allotted 1 billion Euros to support the initiative.

Commissioners from eligible countries recognize the effort as a way to instill solidarity among countries in the European Union. Further, the programs are expected to spur competitiveness in local economies and help residents overcome economic challenges.

Economic Inequality and Addressing It in the United States

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Financial Research, Training Consulting

A former professor of economics and finance, Dr. Antonios “Tony” Antoniou dedicated more than two decades to the field of academia. Dr. Antonios Antoniou leverages his expertise to consult business clients at Financial Research, Training & Consulting, LLP, which he leads as chief executive officer.

In the latest report released by anti-poverty charity Oxfam, nearly half of the world’s wealth is held by 1 percent of the population. The nonprofit organization released a statement in conjunction with the report that predicted that in 2016, the richest 1 percent will secure more than half the money circulating the globe.

To address economic inequality in the United States, Pres. Barack Obama shared his proposed redistributive tax plan during his final State of the Union speech. The tax would garner in excess of $300 billion from the top 1 percent of the nation’s richest people and allocate the funds toward services that help working-class families. Pending support for enactment, the tax proposal brings awareness about economic inequality to the public. It is expected to be a topic of discussion during the 2016 presidential campaign.

Dr. Antonios Antoniou: An Introduction to Applied Economics

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Financial Research, Training Consulting

A former Professor of Finance and specialist in behavioural and applied economics, Dr. Antonios Antoniou holds a Bachelor of Arts in Economics, a Master of Science in Accounting and Finance, and a Doctor of Philosophy in Applied Economics. As a pioneer of doctoral programmes in finance and the CEO and Consultant at Financial Research, Training & Consulting, LLP, Dr. Antoniou has amassed considerable experience in a wide range of economic and financial disciplines and theories. He holds a particular interest in applied economics, the subject of his doctoral research.

Basically, the term “applied economics” refers to the practice of using economic theory and analysis to evaluate real-world problems and address practical issues. Applied economics, therefore, can influence a variety of other fields, including labour economics, industrial organisation, public economics, development economics, and economic history. Economists approach application of the theory in a number of different ways. Case studies, historical analogy, input-output analysis, and empirical estimation through the use of econometrics are four possible approaches.

The origins of applied economic theory can be traced back to French economist Jean-Baptiste Say and British philosopher John Stuart Mill, but the first use of the term “applied economics” can be attributed to British economist J.N. Keynes. In The Scope and Method of Political Economy, Keynes argued for replacing what had previously been known as the “art of political economy” with the name “applied economics,” in order to emphasise the practical use of the discipline. Additionally, he endeavoured to distinguish the real-world application of economic theory from the abstract scientific origins of the theory itself.

Later economists, such as Vilfredo Pareto, Léon Walras, and Joseph Schumpeter, argued for different, specific definitions of the discipline. However, most modern economists agree on the general view that applied economic theory involves reducing the abstraction of the core elements of pure economics to make a scientific analogy between abstract concepts and real-world situations. A very basic example of such an analogy would be to apply broad economic theory to analyze the financial situation of a single household. There is no limit to the depth and complexity of the theoretical analogy or the value of applied economics in general.

For more information on applied economics and other related financial topics, refer to the many articles published by Dr. Antonios Antoniou in leading peer-reviewed journals or peruse his co-authored books.

How Economic Inequality Affects Society

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Economic Inequality

Having taught economics and finance for more than two decades, Antonios (Tony) Antoniou leverages his expertise to lead Financial Research, Training & Consulting, LLP. As a consultant, Antonios Antoniou educates clients on various economic topics that can impact their future.

According to the magazine Foreign Affairs, economic inequality continues to be an issue in the United States as well as in European countries, such as the United Kingdom, Sweden, and Germany. The managing director of the International Monetary Fund noted in a statement in 2014 that the 85 richest people in the world held an equivalent amount of funds as 3.5 billion of the poorest.

The primary struggle to balance wealth comes from society’s inability to disburse opportunities equally. Households with more disposable income can afford superior services, ranging from health care to education, while those with limited means may be able to access basic services at best. As a result, households with less income have fewer resources to help them reach their full potential, thus keeping many in financial disparity and adding to the global issue of producing lower and less durable economies.

Stock Index Futures By Dr. Antonios Antoniou

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Stock Index Futures

In the financial world, indexes track assets or stocks in an industry, while futures estimate their value sometime in the future. To trade in these, one must obtain index futures contracts, which involves one party agreeing to sell and another agreeing to buy a security at a certain price and amount on one day and to take delivery at a later date. Because of this differential in present versus future value, these futures contracts may serve an important function in one’s portfolio. Traders can utilize the “short” nature of a futures contract to hedge their bets against or supplement long-term changes in the market. Although people cannot invest directly in an index, they can buy securities in different market segments.

Many rely on indexes for investment purposes. Some of the most popular include Standard & Poor’s 500, Standard & Poor’s Global 100, and Morgan Stanley Capital International World. While those three concentrate on multinational conglomerates and large-cap stocks, different indexes might have a larger scope and include smaller firms. Alternatively, other indexes, such as the Wilshire U.S. Real Estate Investment Trust and Morgan Stanley Biotech Index, narrow their focus and concentrate on specific industries.

About the Author:

Currently the Chief Executive Officer and a Consultant with Financial Research, Training & Consulting, LLP, Dr. Antonios Antoniou has written on many issues related to economics. Ranked as number 710 in Most Prolific Authors in the Finance Literature: 1959-2008, Dr. Antoniou has written numerous articles on index futures.