March 25, 2003
From the desk of Jane Galt:I'm not blogging directly about the war, because I don't think anyone is interested in my sharing the encyclopedic understanding of tactical military operations I've gained from my extensive collection of W.E.B. Griffin novels. (I don't care what you say -- sometimes you just want to read a story filled with people whose lives contain nothing more complicated than shooting things and fantastic exploits with women of easy virtue).
But please, can everyone stop writing posts/articles on how the last ten minutes activity in the stock market proves their belief that the war is won/doomed? First of all, no one writing any of those "Stocks up on hopes of a quick resolution" headlines took a poll to find out what the millions of investors who set the stock prices by buying and selling individual shares of stock, was thinking. They're just guessing, mostly based on what they think would have caused them to buy and sell if they were people who had money, instead of journalists. Second of all, while the stock market is a useful indicator of the economy, it is not the economy, especially over time periods of several hours. The fact that the stock market dropped three hundred points yesterday does not mean that we are going all going to be out on the street next week, any more than the fact that it's up 100 points today means that we're moving to Easy Street. Third of all, investors overshoot and undershoot, just like you and me, because oops, that's who the investors are. Basing your estimate of where the economy/war is going on the opinions of the folks who brought you Yahoo at $214 a share is mildly lunatic. And fourth of all, stock prices, like other prices, are partly set by good old supply and demand. All the purchases that were delayed in the run up to the war started flooding back into the market when Saddaam didn't gas our soldiers day 1. Excess demand raised prices; some speculators rode the boomlet then sold off. Other things happened in the market. There's obviously some reaction to the war in there, but it's hard to separate how much, and it's not very useful because none of the investors setting the prices have any more idea than the rest of us how this thing will eventually wash out. So please, give the poor Dow a rest.
Posted by Jane Galt at March 25, 2003 1:16 PM | TrackBack | Technorati inbound linksGreatest Post ever. I've been tearing my hair out over pundit and water cooler talk that keeps using the stock market to justify their position. I wonder how Burton Malkiel would respond? ;-)
I made a similar post last night! http://jaysolo.blogspot.com/2003_03_23_jaysolo_archive.html#91320733
In part:
It's just the stock market people. It matters, but it does not equal "the economy."
WHAT??? You're suggesting we be sensible and calm about the stock market?
*SHEESH* You're no fun anymore!
I really enjoy reading your blog here. I just wanted to let you know that! I'm so sick of hearing about the stock market! And those pundits..analyzing everything in which they seem to only accomplish to drive people's fears sky high. (I dont pretend to know much about the stock market) but all the talk drives me up the wall. First it's up 300+ then down , then up. Sheesh. Ok I'm off my soapbox now..Not that I have made any sense either..LOL
Megan is correct: most "analysis" of the stock market is shite.
But most business journalism is shite (c.f. Businessweek). Aside from the WSJ, the FT, and the Economist, and maybe Barron's, most business coverage is hagiographies that make Larry King look like Jeremy Paxman, and reprints of press releases from companies' PR firms. In the Silicon Valley Bureau of Investor's Business Daily, only 2 - two - of the journalists have MBAs or a business education, out of a staff of 40.
New Scientist wouldn't hire journalists without a science or engineering background. WTF do business publications hire people with no business background? (Maybe it's because the good people with business savvy figure out they can make more money doing PR/marketing, and fuck off out of journalism to make real money as soon as they can).
Fortune blew the story about Enron, because - shock - they hired a journalist who could read financial report footnotes. My word! WTF can't the rest of their reporters read footnotes, for chrissakes?
(I'll leave unsaid what this wacky volatility suggests for the rational actor assumption in the efficient-market hypothesis.)
God Bless the traders and journalists but if they're as they appear, panicking from minute to minute, what a skittish lot.
;-)
Ever see a spooked squirrel when you have the little guy cornered on a balcony? Yeah, kind of like that :^D
"...filled with people whose lives contain nothing more complicated than shooting things and fantastic exploits with women of easy virtue..."
W.E.B. Griffin's books are filled with exploits with women of easy virtue? Damn, I didn't know what I was missing!
I would add to your list of market factors, WHO is doing the investing. The stock market is somewhat volitile right now and part of the reason might be that investors that have cash to gamble with are turning over their stock quickly to make large profits,by anticipating certain surges and declines that accompany wars.
just another complexity in the whole complex mess.
I don't care all that much about the daily movement of the stock market, believing as I do in the Random Walk Thesis and the gospel of Dollar Cost Averaging.
W.E.B. Griffin is a different matter altogether. I have been reading his books for years, starting with the entire Brotherhood of War series while I was at the Officer Basic Course some, ahem, fourteen years ago. I've since read the existing books in all his other series as well. He's a lot more fun to read than Clancy, who I also like a lot, because he doesn't get so bogged down in the technical archana but rather concentrates on the characters and plot.
While I find parts of his writing style annoying[most notably, his penchant for constantly repeating the full name, title, and affiliation of the characters--Jack N.M.I. (No Middle Initial) Stecker, Major, USMCR], he's one of my favorite novelists.
Must take you to task for being way to easy (not my usual, I know). You start by talking not about people who predict the course of the economy by gazing at the liver of the stock market, but of the BLINKING WAR, for the love-of-Mike. Bad enough to make an argument which requires the fate of the economy to turn from negative to positive in the course of a single trading session (sometimes 3 times in a trading session). But to grant the same anonymous pack of short-term advantage seekers some foreknowledge of the course of hostilities? Sheesh!!! More vitriol, please.
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