Saturday, November 13, 2010

Philosophy of psychology

Philosophy of psychology refers to issues at the theoretical foundations of modern psychology. Some of these issues are epistemological concerns about the methodology of psychological investigation. For example:
  • What is the most appropriate methodology of psychology: mentalism, behaviorism, or a compromise?
  • Are self-reports a reliable data gathering method?
  • What conclusions can be drawn from null hypothesis tests?
  • Can first-person experiences (emotions, desires, beliefs, etc.) be measured objectively?
Other issues in philosophy of psychology are philosophical questions about the nature of mind, brain, and cognition, and are perhaps more commonly thought of as part of cognitive science, or philosophy of mind, such as:
Philosophy of psychology also closely monitors contemporary work conducted in cognitive neuroscience, evolutionary psychology, and artificial intelligence, for example questioning whether psychological phenomena can be explained using the methods of neuroscience, evolutionary theory, and computational modeling, respectively. Although these are all closely related fields, some concerns still arise about the appropriateness of importing their methods into psychology. Some such concerns are whether psychology, as the study of individuals as information processing systems (see Broadbent), is autonomous from what happens in the brain (even if psychologists largely agree that the brain in some sense causes behavior(see supervenience)); whether the mind is 'hard-wired' enough for evolutionary investigations to be fruitful; and whether computational models can do anything more than offer possible implementations of cognitive theories that tell us nothing about the mind (Fodor & Pylyshyn 1988).
Philosophy of psychology is a relatively young field because 'scientific' psychology—that is psychology that favors experimental methods over introspection--came to dominate psychological studies only in the late nineteenth century. One of philosophy of psychology's concerns is to evaluate the merits of the many different schools of psychology that have been and are practiced. For example, cognitive psychology's use of internal mental states might be compared with behaviorism, and the reasons for the widespread rejection of behaviorism in the mid-twentieth century examined.
Topics that fall within philosophy of mind, of course, go back much farther. For example, questions about the very nature of mind, the qualities of experience, and particular issues like the debate between dualism and monism have been discussed in philosophy for many centuries.
Related to philosophy of psychology are philosophical and epistemological inquiries about clinical psychiatry and psychopathology. Philosophy of Psychiatry is mainly concerned with the role of values in psychiatry: derived from philosophical value theory and phenomenology, values-based practice is aimed at improving and humanizing clinical decision-making in the highly complex environment of mental health care.[1] Philosophy of Psychopathology is mainly involved in the epistemological reflection about the implicit philosophical foundations of psychiatric classification and evidence-based psychiatry. Its aim is to unveil the constructive activity underlying the description of mental phenomena.[2]



 See also


 Further reading

 External links

This page was last modified on 23 October 2010 at 22:19.

Tuesday, November 9, 2010

Why the cash conundrum might benefit equities

Why the cash conundrum might benefit equities

Bill O’Neill, chief investment officer Emea, Merrill Lynch Wealth Management
13 Sep 2010
Scarce income may yet tempt savers to spot the potential of strong balance sheets and resilient cashflow. Many companies are swimming in cash. US non-financial companies’ cash as a percentage of assets is more than 40%, the highest in over a decade.
Bill O’Neill, chief investment officer, Merrill Lynch Wealth Management
Bill O’Neill, chief investment officer, Merrill Lynch Wealth Management
Thanks to impressive business management during the recession, corporate earnings consistently surprised on the upside. Margins bottomed at higher levels than in previous downturns. By the end of this year, S&P 500 non-financial earnings are expected to revisit their previous highs, helped by a return to peak margins, despite lacklustre sales growth.
Along with slashing interest rates, central banks adopted non-conventional policy by providing liquidity to support financial markets. This helped force the yields on government and corporate bonds to low levels.
So, income investors are suffering. UK 10-year gilts now yield 3%. It was 5.5% in September 2007. Some choose equities instead. The current dividend yield on the FTSE 100 index is 3.4% and the consensus is that dividends will grow nearly 20% through 2011. Some sector yields now look eye-popping. Based on 2011 expected dividends, the European telecommunication sector is yielding 7% and energy and utilities sectors offer above 5.5%.
Something looks amiss: either government bond yields are wrong or we are set for a big disappointment from corporate payouts next year.
Investors are still wary. Funds flow data shows they prefer credit over equities. Their concern is simple – yes, analysts are optimistic about strong and growing dividends now, but won’t companies cut dividends if the economic environment stagnates? This is where the bulging cash balances of corporates might be highly relevant. For Europe as a whole, the 2011 expected 4.1% dividend yield is covered 2.4 times by expected earnings and almost four times by expected cash flow. With such oodles of cash on balance sheets, corporates are more likely to increase dividends in the coming years, rather than cut them.
Even if companies globally do not grow dividends, there are other ways they can put their almost $3 trillion in cash to good use. According to the Bank of America Merrill Lynch Fund Manager Survey, investors would prefer companies used cash to increase capital expenditures rather than repair balance sheets. Low credit yields have meant low investment costs for businesses, which should be a support to capital expenditure and subsequent jobs growth.
Pessimists will say the cost of investment is already at extreme lows and this has thus far failed to stimulate capex as organic growth is so scarce. Even the most optimistic would have sympathy with this view, but the combination of low credit yields and large corporate cash reserves should at least support the snowballing mergers and acquisitions cycle.
Expect M&A activity to continue into next year, especially as the cost of debt finance remains at record lows. Apart from M&A or capital expenditure, corporates are also starting to return cash to shareholders through buybacks. In the past few weeks alone, nine large American companies have either repurchased shares or announced buybacks. This will certainly please investors, with 30% of them now wanting corporates to return a portion of their cash to shareholders.
That’s good news for corporates, especially takeover target equity holders. Yet the headache remains for non-equity investors. With healthier corporate balance sheets and businesses wondering what to do with their cash, the unloved equity market could yet return to favour.
Many stock markets and sectors now offer higher dividend yields than credit, and with earnings cover more than adequate, the risk of dividend cuts is mitigated. Those who aren’t disciples of the dreaded double dip might ponder this alongside a burgeoning M&A cycle and a growing number of share buybacks.
Scarce income may yet oblige investors to examine the potential of strong balance sheets and resilient cash flow – a combination that promises a better risk-reward in the next month than UK gilts.


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