Global stock markets have plunged amid fears that the US Federal Reserve has left it too late to begin cutting interest rates and risks damaging the world’s largest economy.
Shares tumbled in Asia, with Japan’s Nikkei 225 index closing down 2,216.63 points – its second-largest points drop in history – after weaker than expected US factory data showed output dropped to an eight-month low in July amid a slump in new orders.
So, did they keep rates high enough to causes a proper, deep recession? Or not? And the bet isn’t about that, it’s about what people believe about that. Good luck.
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8:03am
UK stocks plunge amid fears of US recession
Siri. What is confirmation bias?
(Community note: the FTSE 100 is currently down by less than half a percent).
“And the bet isn’t about that, it’s about what people believe about that.”
This is precisely the reason I’ve never owned shares, or got involved in any other financial market. There’s never an exit point where the result is finally in and the market is settled according to a risk/reward ratio that was fixed when you bought your shares or entered the market. You’re always at the mercy of other people’s beliefs when you try to liquidate your assets.
It’s also why I’ve never wanted to be a bookmaker. You’re facing precisely the same problem: setting odds not according to what you think is the probability of each contestant winning a race, but on your judgement of how the average of the rest of the world will see those probabilities. I can price up a race. but I sure as hell don’t know how to price up the hysteria of crowds.
It’s why I prefer being a punter: you get a result, write a cheque or receive one, and you move on.
A stock market is a legalised casino fuelled by rumour.