Jekyll and Hyde
An expression “Jekyll and Hyde” means a description of the stock market that entails a split mind. The term refers to a combination of positive and negative aspects.
So the concept of Jekyll and Hyde consists of two essential elements. A part with Jekyll embodies positive traits in a market environment. Predictability and restrained nature are the key features of a notion. While Hyde connotes all its negative angles. It may be defined as volatile, fluctuating, unforeseeable in respect of the investment community.
Jekyll and Hyde have frequent occurrences on Wall Street, as the shares prices of different enterprises are usually varying.
Essence of Jekyll and Hyde
Jekyll and Hyde links to a well-known novel by Robert Louis Stevenson. The plot thickens around an honored (although barely guiltless) doctor — Henry Jekyll, who makes a potion inducing certain metamorphosis in his identity. He becomes a violent and atrocious sadist, known as Mr. Edward Hyde. Controversial characters of these central figures — Jeckyll and Hyde, are combined in one person.
Therefore, markets present the same duplicitous nature, capturing the personalities of Jekyll and Hyde. Therefore, conventional investment techniques eliminate the occurrence of Hyde, producing complaints and distresses to unwitting fund providers.
So the positive and negative personal connotations may be parallelled to the situation on stock markets. Predicted and tranquil economic environment substitutes drastically, and volatile and unforeseeable markets come to the fore. The same is the Jekyll and Hyde concept. Corresponding to Stevenson's characters, players are confused by these sudden changes.
Development of behavioral finance
Irregular market behavior, as it is mentioned in the term “Jekyll and Hyde”, contradicts an efficient market hypothesis that states price fixity of any share and its actual market value. Notably, this stability exists in all time periods. The reason for the above-mentioned statement lies in fact that this price formation centers on all the data, which is accessible in a particular time phase.
A new area of the theory — behavioral finance, anticipates the influence of a well-minded decision taking or its deficiency on market movements. Public actions, interconnected with greed and terror, initiate negative implications, as “Jekyll and Hyde” character.