Thesis (MPhil (Information Science))--University of Stellenbosch, 2010. / ENGLISH ABSTRACT:
This thesis investigates investment theory in the light of complexity theory. These
insights from diverse fields contain powerful images, metaphors and ways of thinking
that allows one to seek new ways of comprehending the nature of the economy and
therefore the nature of investment and the related issues of uncertainty and decision
making. Complexity theory views the economy as being a dynamic, continuously
adaptive, nonlinear system. This is in contrast to traditional or classical economic
theory that views the economy as being a simple, linear, equilibrium deterministic
system.
This thesis is a conceptual study exploring the implications of a complexity
worldview for investment decisions by looking at the nature and characteristics of
complexity and then overlaying it on the characteristics of the economy.
It is argued that complexity is caused by three elements: the structure of the system,
human behaviour and exogenous factors. Thereafter follows an analysis of how
investment decisions are made in the light of complexity by illustrating the investment
models of two very successful, yet different investors: Warren Buffet and George
Soros.
Buffet’s model hinges on value. He realises that emergent phenomenon driven by
irrational behaviour of investors leads to intrinsic values of shares to differ widely
from perceived value. When quoted or perceived values are low than it is advisable to
purchase as you have a margin of safety. Over the long term the market recognises the
real value of the share. He tries to ignore the vagaries of the market and to focus on
fundamentals. His list of fundamentals include; the franchise value of the company,
quality of management and industry dynamics.
George Soros in contrast utilises emergence patterns to locate potential investments.
His model is that systems are flawed, human thinking and decision making is flawed
and the interaction of the two lead to perturbations and oscillations. He focuses in
trying to understand the flaw in systems and in human behaviour and to find some
kind of pattern that he could utilise to make a profit. It is shown that both investment
models can be understood from a complexity perspective and that these two investors
built aspects from complexity into their decision models. / AFRIKAANSE OPSOMMING:
Die tesis ondersoek investeringsteorie in die lig van kompleksiteitsteorie. Met die
hulp van metafore en insigte vanuit kompleksiteitsdenke word gesoek na nuwe
maniere om die aard van die mark en investering verwante aspekte van onsekerheid
en besluitneming te verstaan. Die kompleksiteitsperspektief sien die ekonomie as’n
dinamiese en aanpassende nie-lineêre sisteem.
Dit word gedoen deur die implikasies wat kompleksiteit vir investeringsbesluite inhou
konseptueel te ondersoek. Die aard en eienskappe van komplekse sisteme word
verduidelik en dan op die ekonomie toegepas.
Daar word geargumenteer dat kompleksiteit deur drie elemente veroorsaak word: die
struktuur van die sisteem, menslike gedrag en eksogene faktore. Daarna word die
praktyk van investeringsbesluite geanaliseer in terme van kompleksiteit duer
investeringsmodelle van twee suksesvolle, maar uiteenlopende, investeerders te
ondersoek, naamlik Warren Buffet en George Soros.
Buffet se model draai rondom waarde. Hy sien die irrasionele gedrag van
investeerders as ‘n ontvouende fenomeen wat lei tot ‘n gaping tussen intrinsieke en
verwagte waarde. Sy investering word gebaseer op die aanname dat oor die langer
termyn die mark die intrinsieke waarde herken. Hy ignoreer dus korttermyn
skommelinge in die verwagte waarde en fokus op die fundamentele, waaronder die
maanwaarde van die besigheid, die kwaliteit van die bestuur, en industrie-dinamika
tel.
Soros se model daarenteen gebruik ontvouende patrone en potensiële
investeringsgeleenthede te ontbloot. Sy model is dat sisteme inherente
teenstrydighede het as ook menslike gedrag en besluitneming. Dit lei tot ossilasies en
versteurings. Sy fokus is gerig daarop om hierdie versteurings in die sisteem tot
voordeel aan te wend.
Daar word getoon hoedat beide investeringsmodelle vanuit ‘n
kompleksiteitsperspektief verstaan kan word en dat die twee investeerders sulke
aspekte in hulle investeringsbesluite inbou.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/2980 |
| Date | 03 1900 |
| Creators | Bana, Mohammed |
| Contributors | Kinghorn, Johann, University of Stellenbosch. Faculty of Arts and Social Sciences. Dept. Information Science. |
| Publisher | Stellenbosch : University of Stellenbosch |
| Source Sets | South African National ETD Portal |
| Language | English |
| Detected Language | English |
| Type | Thesis |
| Rights | University of Stellenbosch |
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