Abstract. Directional forecasting of a future market price development of liquid investment instruments is the focus of interest of investment companies, individual investors, banks and other financial market participants. This problematic has still not been fully answered because the market price development is a process which is very close to a random walk and appropriate models are still under the discussion. The opportunities can be used for the better prediction, their usage for profit making, quantification and also their discussion according to the current financial market models (models with the direction or the volatility dependence) is the core of the paper. The purpose of this research is also to simplify the whole situation for the practitioners due to the complicated theoretical background of this financial market topic.
The research addressed the relevant question whether the Fourier analysis really provides practical value for investors forecasting stock market price. To answer this question, the significant cycles were discovered using the Fourier analysis inside the price series of US stocks; then, the simulation of an agent buying and selling on minima and maxima of these cycles was made. The results were then compared to those of an agent operating chaotically. Moreover, the existing significant cycles were found using more precise methods, suggested in the research, and based on the results of an agent buying and selling on all possible periods and phases. It has been analysed whether these really existing cycles were in accordance with the significant cycles resulting from the Fourier analysis. It has been concluded that the Fourier analysis basically failed. Suchlike failures are expected on similar data series. In addition, momentum and level trading backtests have been used in a similar way. It has been found that the level trading does provide a certain practical value in comparison to the momentum trading method. The research also simplifies the complicated theoretical background for practitioners.
The correct model of a liquid financial market is very important for all market activities including for example a stock or bond portfolio management or an asset valuation. Dynamic Financial Market Model is a comprehensive model with a detailed interpretation. The model considers also feedback processes which cause price development direction dependence on the previous development. This is why it is also able to explain departures from normality as leptokurtic deformations with fat tails and sharpness, extreme values or skewness in the returns’ probability distributions. These departures are commonly explained using a wide range of models with volatility dependence. The question is then arising, whether the volatility or direction dependence is more in accordance with reality. Price Inertia Feedback is one of the most important and has a direct impact on probability distribution and also on a price forecasting. Empirical measurement of this feedback is the core of the paper.
The importance of knowledge appliance process is based on the fact that it is related to effective appliance of existing knowledge to solve problems, manage business processes and knowledge about adequate working environment appliance creation. Knowledge appliance process is described as knowledge management implementation stage when knowledge is transformed into specific organizational results. Organizations in order to implement effectively and coordinate the knowledge appliance process often encounter problems of psychological, functional type or loss of knowledge value. To solve this type of problems knowledge appliance process is used, in which it is important not only to know about internal and external knowledge, where is knowledge, who has this knowledge but also to apply existing knowledge to complete work functions and to create value of organization. To solve these problems effective knowledge appliance process is necessary, during which new or existing knowledge has to be suitable to use and apply to increase working performance. In order to implement effectively the knowledge appliance process for organizations, it is necessary to assess this process efficiency affecting factors. The article looks into theoretical evaluation aspects of knowledge appliance process, which are practically evaluated by the example of pre-school education model example. Research methods are scientific literature analysis, survey, expert and multiple criteria evaluation.
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