You know all those people who say you cannot do better than allow the market to do as it lists? In particular, that it is impossible to sit down and think about something and then act on your conclusions and have your act turn out better than if you just let the invisible hand take care of it?
Well, balderdash. Here's today's
evidence, from Business Insider:
Of course the story was false, though it remained uncorrected for several minutes. Eventually an AP employee tweeted that the company's account had been compromised.
But in that time, the stock market briefly tanked.
The Dow had been up over 100, but it then lost 150 points.
How much is 150 points off the Dow worth?
Tuesday's event was transitory, because it proved easy to show and tell that the market was reacting to a delusion. The market always reacts to delusions, and sometimes those delusions persist for years and years.
And if the government set the price/value of each stock/company, you think things would be better?
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteYou mean better than having it done by crooked stockjobbers? The question answers itself.
ReplyDeleteHowever, it might not be necessary to jump right to government. This sort of thing would be an excellent opportunity to show that markets can protect not only themselves but innocent bystanders by self-awareness and prudence. Exchanges have been asked, for example, to do something about machine trading.
Machine trading would not seem to be something markets cannot get by without.
However, the exchanges have proven unwilling.
So, in self-defense, outsiders should do the job.