NEW YORK (Reuters) – Three academics say there was a bubble in LinkedIn Corp’s shares during the first four days of its trading, which they have determined definitively using a model they designed.
The three have devised a model they say can establish in real time whether prices in a market are doomed to collapse.
If investors can spot speculative excess in short order, they can avoid overheated markets and better allocate their capital, said Cornell University finance professor Robert Jarrow, who wrote the paper along with Ecole Polytechnique’s Younes Kchia and Columbia University’s Philip Protter, both mathematicians.
“If enough people think there is a bubble and not enough people want to hold it, maybe the bubbles will disappear before they get too large,” Jarrow told Reuters.
Categories: Americas, Economics, Internet, United States