X, the thing that troubles me is the concept of "the market." As someone posted here, the fact that investors run up the price of the wrong stock because they got the symbol wrong, indicates that rationality isn't, over the short term, what's going on in that valuation. And so forth. But, is everyone an idiot? That's what Mary Cluny asked, and I concur.
Your question, I think, assumes that "the market" acts - - and I wonder how? Clearly, individual investors make individual decisions. The aggregate of those decisions constitutes mass behaviour. The concept of "the market" acting reminds me of the old joke about the thermos bottle, "how do it know?"
(One man explains to another man, the thermos bottle keeps hot drinks hot and cold drinks cold. Startled, the second man asks, "how do it know?") |
