But the consequence was that the US stock markets, which were still open at the time that the announcement was made, rose by approximately 9%, although they did not recover all the losses that Trump inflicted upon them despite doing so.
….
All these factors should have complicated and reduced market euphoria last night. It appears that they did not. For anyone who claims that markets are efficient and take all factors into account when pricing because they are possessed of a large amount of information about future actions, all of which they can accurately price, yesterday was the clearest indication that such an idea is complete and utter nonsense. Markets did no such thing. They took one piece of information and reacted to it without ever seeking to contextualise what might be happening.
The efficient markets hyupothesis says that generally known information is already in market prices. Stronger versions say that privately known information is already in market prices. Therefore it is new information that moves market prices.
EMH doesn’t say market prices are *right*. It says market prices invclude all the information folk have and what they think about it.
So, new information moves market prices is not a disproof of the EMH. It’s rather a proof of it….
“… all the losses that Trump inflicted upon them …”
I thought he hates the stock market? Oh it’s Friday.
“Markets did no such thing. They took one piece of information …”
Making the typical leftie mistake of treating markets like some sort of evil hobgoblin with a purpose.
‘The efficient markets hyupothesis’ (sic) fatally omits the wife screaming, “Sell! Sell! We are going to lose everything!”
People tell me how much they lost. To which I say, “Why did you sell, dumbass?”
For anyone who claims that markets are efficient…
Nobody claims markets are efficient. *EFFICIENT* markets are efficient.
The EMH does *not* claim that markets take all factors into account – it claims that market participants, in aggregate, take all *known* information into account.
I could – *should* – go further and state that so-called “followers of the EMH” do not claim that “markets are efficient” but merely state that “if EMH applies” – just as “if Euclid’s axioms apply (Euclid’s axioms for a plane do not apply on the curved surface of the earth so the parallel lines of longitude meet at each pole)” – then certain consequences will follow, such as a portfolio of uncorrelated stocks having less volatility than a single stock or a positively correlated portfolio. [Negative correlations can reduce volatility but often the reduction in beta is insufficient to compensate for a reduction in alpha.]
If Murphy’s ignorance was not of mild amusement it would be tragic and infuriating.
It’s commie bullshit. It matters not how efficient or knowledgeable the markets are. FREEDOM is all that matters. Being able to be right or wrong is the point. It is error free. Being “wrong” is information the market will use in its perpetual evolution.
Commies don’t hate the markets, they hate freedom.
They took one piece of information and reacted to it without ever seeking to contextualise what might be happening.
Market traders always said “Up/down on anticipation, down/up on realisation.”
I’d read that as the better informed moving early & the following herd overdoing it. Whereupon the better informed take profits.
All prices are opinions & all opinions count. But prices are always transactions that haven’t happened.
“… all the losses that Trump inflicted upon them …”
I thought he hates the stock market? Oh it’s Friday.
Spud hates the stock market, but he hates Trump more. As with all lefties, where/what is irrelevant compared to who/whom.
Well it’s the usual tirade – his alternative of course is price controls. Which have been utterly disastrous whenever tried.
His objection is to freedom. He want government to control everything.