Log in

No account? Create an account
Regulated TMC (Total Market Capitalization) - Order of the Web [entries|archive|friends|userinfo]
Order of the Web

[ website | Order of the Web ]
[ userinfo | livejournal userinfo ]
[ archive | journal archive ]

Regulated TMC (Total Market Capitalization) [Dec. 13th, 2008|04:23 pm]
Order of the Web


[Current Mood |accomplishedaccomplished]

  Regulated TMC (Total Market Capitalization)

I  Constant TMC

1.  TMC0 is TMC as it were before the first market day of the year started.

2.  TMCi is TMC at the end of the i-th day.

3.  In the Constant TMC model, TMC at the start of each market day is set to the TMC0 value.

   All the prices are normalized to the value, multiplied by the factor

k = TMC0/TMC(i-1)

  This model is stable, from the psychologic point of view.  To say, there is no reason to take your money out of such a fund market entirely, if you don't actually need them elsewhere.  At plague, natural disaster, war - it's stable, in this particular sense of the word.

  Nevertheless, Constant TMC fund market cases deflation and recession.  In the best case - stagnation.

II Inflated TMC

In the Inflated TMC model, the TMC is normalized to the target inflation, as an opposite to the constant.

1.  DI per cent is the target TMC inflation per market day.

2.  TMCi is TMC at the end of the i-th day.

3.  TMCT0 is TMC as it were before the first market day of the year started, as in Constant TMC model.

     TMCTi = TMCT(i-1)*(1 +  DI/100) - recursive definition of the Target TMC in the i-th market day.

4.  In the Inflated TMC model, TMC at the start of each market day is set to the TMCi.

  All the prices are normalized to the value, multiplied by the factor

k = TMCTi/TMC(i-1)


0.02% <= DI <= 0.05%  looks like the reasonable range to set the target daily inflation rate for TMC, in the current circumstances.


  The Inflated TMC model is a stable model, lacking the major failures of the Constant TMC model.


[User Picture]From: mat33
2008-12-15 09:05 am (UTC)
There is some problem in my terminology. It took days for me just to spot it. Integrated Total Market Capitalization? Total Market Capitalization of the Fund Market sounds even worse...
(Reply) (Thread)