The Fickle 666 Market

[webart]

How efficient is the market at measuring value really ? I mean look at the recent low on the S&P, 666.79 on the 6/3/2009. Was 666 points really the low value point of the current mess or was 666 just a superstitious low.

I think the second is true, the market is superstitious, the market that is suppose to measure true value, is superstitious and fickle. No wonder things are such a mess.

 

[foredog]

Human emotion

Fear
Greed
Superstition

 

[arabianights]

pure chance

 

[foredog]

The price i'd agree about but it the selling was overdone as usual. the market is not efficient at measuring value

 

[webart]

I doubt it was chance somehow, it's the fickle, market, driven by fear, greed, ignornant, sheep like behaviour and umm, superstitious numbers. This is the market the runs the world, the market that is suppose to measure true value.

If that number stands as the low of this crisis, it will be a testiment to the mentality that rules the market.

 

[arabianights]

The price i'd agree about but it the selling was overdone as usual. the market is not efficient at measuring value

yeah, I'm with Black on this... markets are efficient, by which he meant rarely more than a factor of two from fair value

 

[case777]

I doubt it was chance somehow, it's the fickle, market, driven by fear, greed, ignornant, sheep like behaviour and umm, superstitious numbers. This is the market the runs the world, the market that is suppose to measure true value.

If that number stands as the low of this crisis, it will be a testiment to the mentality that rules the market.

It does measure true value because all values are subjective.

 

[webart]

Yeah, a value agreed on by superstitious numbers.

Next time I sell something thats worth $590, I'll expect $666 to be the agreed value since it's a superstitious number.

 

[case777]

A thing is "worth" whatever you can exchange it for.

 

[webart]

Ok, but the market is still Fickle and Superstitious. The value it is trying to establish is the value of 500 companies, yet it finds the devils number as the low value in this crisis ! Sure the market swings from over sold to undersold, however that dosn't change the fact that the market is Fickle and Superstitious. Hardly a good way to lead the world financial system, hardly a good way to agree on the value of the S&P500.

 

[case777]

It's not the best way morally I guess, but it is the most efficient way to bring supply and demand into equilibrium.

When you say the market, what you really are saying is that "people" are trying establish a value. Since everyone values things subjectively everyone will have a different idea of what something is worth. When all these people come together levels of supply and demand will be established and price will find equilibrium. People are supertitious and stupid and change their values on a whim, they also move in herds. So when soimethign reaches 666, or gold reaches 1000, or whatever resistance or support, the superstitious sheep will overwhelm everyone with their valuations and shift demand and supply.

If the herd says something is worth x but you say is is worth less, you get shortages and chaos, because you have moved the price without changing supply and demand.

Not like we should be complaining though. We make money by getting on board with sheep like this.

 

[webart]

Well, 95percent, (some stats show 98 percent long term) of 'us' loose all of their money, 'getting on board wth sheep'.

It's not a moral problem, its simply a poor measure of value as it is measured, in large part, by fear, greed, ignorance, superstition.

 

[case777]

I think most people lose money from cutting losses too late, and taking profits too early, which makes their w/l ratio so small that even the best of success rates couldn't save their accounts.

The only way to make money is to join the crowd, since they decide the direction of the market. Price action is about seeing whether the subjective overvaluers or subjective undervaluers (bulls/bears) are in control, or about to take control. Their valuations will shift supply and demand and force price to find a new equilibrium at a higher/lower point.

It might be a poor measure of value, but its the best we've got.