Dr. Jinpeng Ma, associate professor of economics in Rutgers University, who made a great contribution for Al Roth and Lloyd Shapley winning the 2012 Nobel Prize in Economics for their success of the two-sided matching theory and the theory of market designs, visited Wu Yuzhang Honors College and brought a remarkable academic seminar with a small group of Wu Yuzhang students.

“You guys have read the material that I sent to you before class, so we can spend most of time on discussions. Don’t hesitate to ask if you have any question.”Dr. Ma said.

At the beginning of this seminar, Dr. Ma introduced MACD, RSI and Williams%R, the three technological indicators he often used. He shared his approach to predict the tendency of American stock market based on the research on the recessions of American economy. Differing from other traditional timing strategies, Dr. Ma’s investment strategy is the passive buy-and-hold strategy attached to a hedge against the risk of recessions. Students were greatly impressed by his particular method.

Student: “It seems that this method does well in developed securities markets like the market in the USA, but how about some other markets such as the Chinese stock market?”

Dr. Ma: “That is a good question. Markets in two countries are completely different. Even in Europe, the market is also advanced, but they don’t have the same time cycle.”

Student: “And may I understand it in this way? The portfolio that the research can support is a group of financial products attached to the macro economy such as stock index futures and foreign exchange.”

Dr. Ma: “You are right. We have our eyes on the business cycle. Stocks of some single companies can be affected by some accidents which cannot be forecasted. You don’t want to take the risk.”

After several active discussions, most students had talked about their ideas. Then the topic came to the prediction of recessions.

“Many researchers think that American economy is always affected by some external elements, but I believe there are some internal factors deciding the regulation of American recessions.” Dr. Ma said. “Using my research results correctly, we can forecast the recessions with the deviation less than two months.”

Student:“Professor, I have a question. We know that there was some hypothesis which believed that the internal regulation was the most important factor, but they were not supported by most scholars. What do you think about it?”

Dr. Ma: “This research is based on my experience. They just believe the changes in market are ahead of changes in stocks, but they don’t know how to predict the recession. You can predict the market, and this is the evidence that you follow the right regulation.”

Student: “So have you made your own theoretical system or found some theoretical basis that supports your research?”

Dr. Ma: “Now my team is working on it. Using this method, if we can predict the beginning and the end of the next recession, there is no doubt that we are right. Actually, we have tested this approach in American market for years and the result is satisfying.”

After that, Dr. Ma showed in detail two rates that he often used to make a prediction about recessions. The unemployment rate was used to tell when a recession began and the capacity utilization rate was for the ends. Afterwards, another passionate discussion about the topic began.

Aiming at the problem that the unemployment rate cannot be used in this approach directly, Dr. Ma helped students make a deeper understanding on how to change some important indicators like unemployment rate technologically with correct formulas.

Wu Yuzhang students took part in the academic discussions actively throughout the whole seminar. With patience and enthusiasm, Dr. Ma answered every question and led students into a more thorough thinking. What’s more, Dr. Ma also told students the first duty of people in the financial system and the significance of forming good habits both in life and study.

Lecturer introduction:

Jinpeng Ma, Ph.D.

Director of Graduate Program and Development

Associate Professor of Economics

Rutgers University, the State University of New Jersey

Field of research: Microeconomics, Game Theory