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Far From Random: Using Investor Behavior and Trend Analysis to Forecast Market Movement by Richard Lehman

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Introduction

FROM MARKETING TO MARKET TRENDS: EPIPHANIES ABOUT INVESTOR BEHAVIOR

P rior to 1975, the word marketing was absent from Wall Street's vocabulary. On May 1st of that year, however, the brokerage world was forced into one of the quickest and most dramatic transformations in its history as the Securities and Exchange Commission (SEC) banned the fixed commission schedule previously imposed by the New York Stock Exchange (NYSE) on all member firms. The floodgates that held back discount brokerages opened almost immediately, and, for the first time, full-service Wall Street firms were forced to compete on price. Every major brokerage firm lost customers to the new discounters and was pressured to lower commissions for many of the customers who remained. The loss in revenue placed heavy pressure on the firms not only to develop alternate revenue sources from other services or products but also to seek (much to their own dismay) marketing help. As luck would have it, I graduated in May 1975 with a fresh marketing MBA and was looking for work in New York.

Wall Street firms jumped reluctantly into the world of marketing, opening a window for the first time into the minds of their customers. Shortly after fixed commissions were abolished, the NYSE, in a genuine but misguided attempt to help guide its member firms through this new marketing challenge, decided it would take on a leadership role as a market research entity. As a newly hired marketing manager at the NYSE, my first task ...

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