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Originally Posted by tisonlyi
Even folks who normally shout the gospel of rational markets are, currently, expressing the opinion that said markets are not entirely rational at the moment.
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When people who make money exploiting something in the market that they "discovered" and then they start to loose money on that "discovery" they are generally the ones shouting about how irrational the market has become. What I do, is ask those people some questions about how they cam to that view. It is usually pretty revealing.
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The truth is, they never were. The truth is, we have no control other than the power to open and close said markets.
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Market participants have complete and total control over what they do. If a person is a passive investor, they are not a market participant in my view. When parties with equal experience/training/knowledge or access to knowledge participate with each other in a free market how could it be anything other than rational? I think your views must be based on "lambs playing with lions".
---------- Post added at 08:11 PM ---------- Previous post was at 08:02 PM ----------
Quote:
Originally Posted by tisonlyi
After all you've seen of the past 12 months, the past 10-30 years even, you still cling to efficient or rational market gospel as truth?
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In the long-term, yes.
Many predicted the dot com bubble bursting, long before it burst. Remember Greenspan comment about irrational exuberance. Personally I got burned because I got greedy and let emotion get in the way. The "market" has no emotional failings and it corrected, this correction was clearly predictable and after studying the issue after the fact I can clearly see what the "market" was telling everyone. The "market" was being very rational, and effectively/efficiently communicated information to everyone, especially in this age of access to information.
Also, many predicted the housing bubble bursting.
Many predicted the "banking crisis".
And now many are predicting a fiscal crisis from government spending and the government amassing massive debt. we know taxes will go up, we know high inflation is around the corner. We know standards of living will decline.