That’s what I said to my parents-in-law who asked me to explain the “market” behavior that turns on every bit of news.
To the ordinary people, American or Chinese or anyone else, the “market” is hard to explain/understand. That’s because it really is nuts/bonkers/crazy/insane/irrational. This is NOT some “rational market”, because this “market” of today responds to opinions of those who claim to know. But do they really know? Or are they merely seeking to influence the outcome with their opinion?
This is an age old thing. Fortune tellers have been around since man conceived the abstract concept of time.
And as in every age, fortune tellers try to rationalize the irrational. Astrology and card reading were once akin to some form of science. Of course, some of this is based upon basic psychology and other scientific observations (if you know the weather pattern well enough, you can predict the weather fairly well). But let’s face it, the more “extreme” the predictions are, the more irrational they tend to be.
Thus, I observed, why are all the “market experts”/news commentators making all those silly predictions (which often turned out to be untrue, even for their own markets, let alone for foreign markets)?? Particularly, why do they feel the need to shoot their mouths off on every bit of small “news”?
Itchy trigger much?
Take recently, the Chinese Communist Party leaders held a policy meeting, the Third Plenum. I do not underestimate the importance of that meeting, but I seriously doubt that they would bother to explain all the nuances of policies, NOR would the news hawkers really understand any of it.
Which is all the more surprise that so many newsies started making doom predictions on the “uncertainties” of that meeting.
Which is also to note, WHY jump the gun? Shouldn’t the MARKET determine whether policies worked??! WHY preempt the MARKET? WHY are all these loud voices trying to beat each other to get their opinions in, before the MARKET had a chance to see the policies in action??
It’s not just for China, it’s all of the West.
Obama gets elected? Opinions react to drive the market, before any policies are actually made. All worked up for a position that is supposedly “checked and balanced” by the system. Isn’t the system supposed to be balanced enough to prevent the irrational ups and downs?
Well, apparently, nobody is educating the Newsies.
Now, I learned recently also, that there are actually new “markets”/casinos for betting on “options” of which politicians would win which election, because apparently, the market will shift up and down based upon whether Hillary Clinton will win 2016 Presidency of US.
Wow, yeah, that’s pretty nuts.
Adam Smith, someone is predicting that you are rolling in your grave, and betting money on that too.
No, it’s not the invisible hand, it’s the hands of the mob opinion driving the MARKET now.
Indeed, the ONLY rational markets now seem to be the ones supposedly “state-controlled”, such as the one in China. They are actually specifically designed to ignore the Western market of Newsies, to buffer against and ignore irrational opinions (mostly by refusing to allow the Newsies to participate in the market, and prosecuting them for “rumor spreading”. Yes, that’s why China is cracking down on rumors).
On that note, isn’t “democracy” one of those “predict-debate-ahead” kind of system? Yeah, it sounds great, but does it really work, or is it just like every other system? Shouldn’t the “market” determine that?
I also remember distinctly, back in 2008, when the real estate market in US was taking the most severe dive, when the bubble burst, that I was still getting “news” from various bank analysts on how the market was still doing well, and prices will still go up.
I was thinking, “what planet are these idiots living on?”
Of course, it’s entirely rational from their point of view. Their “opinion” was that the Market should keep paying them ridiculous irrational prices to keep paying their equally ridiculous salaries/bonuses. That’s the bottom line for them, not for the rest of us.
Lesson in this? “Free opinions” are there to only make money for the Newsies, not for every one else.
“Market”? If you let the “market movers” move you, then you are not a market, you are just cattle for the slaughter.