I would like to ask the fellow readers of the dailyspec if anyone has some thoughts on the subject of physics vs markets.

If you bring a GPS along on a bicycle trip, you will see that the altitude-time graph shares the same qualitative properties as a stock price. A bicyclist declines hills faster than ha climbs them. I'm no physicist, but if I remember my high school physics correctly, gravity pulls one down with a constant force = M*G = bicyclist's weight * 9.81 m/s^2. On a horizontal ride one will never notice this force because the road pushes up with an equally large force. On a climb, however, one does not have this luxury. One's muscles must generate M*G*cos(angel of climb) just to fight gravity. Indeed, for anyone except Superman, climbs will be much slower than descents.

(Please note that the physics description may have some mistakes. This is not my area.)

If one instead plots altitude against distance, not time, on the horizontal axis, the declines-steeper-than-climbs bias disappears. Would the same be true for stock prices if one plots these another way, e.g. against volume instead of time?

If so, can any lessons be drawn from physics? Has anyone tested this?





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