Let me tidy up that last post.
There is something in economics and finance called the efficient markets hypothesis that contains a massive get out clause for the wary amateur: don't expect sudden changes in the prices in the stock markets because you think there ought to be. The efficient market has probably already taken account of everything you and I can imagine.
So how stupid then that as a result of the holding of those 15 Bitish servicemen by Iran:
Oil prices have risen to their highest level this year after 15 British navy personnel were seized at gunpoint by Iranian forces in the Gulf.
(See http://news.bbc.co.uk/1/hi/business/6485529.stm)
So a raging inferno is about to unfold? Universal conflagration? I don't think so.
End of that rant. New rant.
Now, what about that doomsday clock: currently set at seven mintues to midnight. Midnight represents armageddon. Now isn't that stupid? They initialluy set the clock around 60 years ago at a stupidly late place on the dial and every times something happens such as a Middle East crisis and global warming, the panic everyone into thinking armageddon is imminent. They out to have set it at around 2 am in my opinion and even now it should be no later than around 2:30 pm.
Who are these clowns?
DW
2 comments:
You are mistaken about efficient market hypothesis. It says that all current information is reflected in the prices of the securities, not unknown future events. Nobody knew that Iran was going to do that, but now that is has happened the markets quickly integrated this new information.
Thanks for your comment and I do stand to be corrected; but how about this:
"An 'efficient' market is defined as a market where there are large numbers of rational, profit-maximizers actively competing, with each trying to predict future market values of individual securities, and where important current information is almost freely available to all participants. In an efficient market, competition among the many intelligent participants leads to a situation where, at any point in time, actual prices of individual securities already reflect the effects of information based both on events that have already occurred and on events which, as of now, the market expects to take place in the future. In other words, in an efficient market at any point in time the actual price of a security will be a good estimate of its intrinsic value."
(http://www.investorhome.com/emh.htm)
I was referring to that part of the above that says, '... based both on events that have already occurred and on events which, as of now, the market expects to take place in the future ...'.
Iran has kidnapped (emotive word) servicemen before and those servicemen have been returned quickly and safely before. Unless these speculators (again emotive) really know soemthing the rest of us don't then why was there the significant (over) reaction there was?
DW
Post a Comment