Thursday, November 1, 2007

Who's to Blame 2? The Market Strikes Back!

Okay, maybe too much Star Wars as a child.

Anyway, I suggest that (if you haven't already) you read the comments to my last post. I think they provide some interesting elaboration.

As a follow up, I want to point out something that I think is often forgotten.

When we study economics or finance, each theory either assumes that everything else is held constant, or that a specific set of assumptions are agreed.

In reality, it doesn't work that way.

We can speculate all we want, but there is no way to know for sure how one policy will, in the future (or would have, in the past) effect(ed) the markets.

Markets are dynamic. They react (and often overreact) to stimuli, often in unexpected ways.

It's part of what makes the market fun.

Please keep that in mind when you engage in "Monday morning quarterbacking."

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