Doug Henwood wrote:
> christian a. gregory wrote:
>
> >anybody else see the article in the new york times yesterday about
> >quantitative theorists/ market jockeys? in the end, it argued that "the
> >unexpectedly slow development of quantitative trading (i.e. the use of
> >mathematical models to exploit "irrationalities" in the system) supports a
> >long-held but hard-to-prove belief about stock markets, especially america's
> >extraordinarily deep ones: they are formidably efficient, meaning stock
> >prices are fair reflections of what the investing public will pay for shares
> >at any given moment." hunh? so, the only logical options are (a)
> >irrationalities can be explained and exploited (i.e. they aren't -that-
> >irrational); and (b) irrationalities are incidental and/or peripheral to the
> >bedrock rationality of market players?
> >
> >gawd, no wonder keynes is making a come-back in the pages of business week.
>
> People are playing wordgames here with rationality and efficiency. Sure,
> the stock market is "efficient" - in the sense that changing perceptions
> are reflected almost instantaneously in prices. But are those perceptions
> accurate, or consistent with what went before and will come after? Are they
> relevant for anything beyond the trading moment? If the market correctly
> reflects the consensus of the moment, does that maket it "rational," even
> if that consensus is the product of mass psychology? Amazon.com's stock is
> worth more than the combined capitalization of Borders and Barnes & Noble.
> That efficiently reflects the perception that Amazon.com represents the
> future, where the sky's the limit. The market is efficiently & rationally
> incorporating that perception, but is the perception rational?
>
> Doug