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The purpose of the market is not to determine valuations, it is to facilitate transactions. The transactions happen at different prices (very close together) -
by beejiu 10y ago
The purpose of the market is not to determine valuations, it is to facilitate transactions. The transactions happen at different prices (very close together) - the idea is the market participants (buyers and sellers) have their own ideas about valuation and enter transactions accordingly. All else is speculation.
- JumpCrisscross 10y ago> the purpose of the market is not to determine valuations Promoting price discovery [1] is one of the fundamental features and functions of a market. Side note: the line between "speculation" and "investing," where the former refers to short-term shareholding and the latter to a specific set of Graham-Dodd valuation models, is not a general economic term. It only makes sense when discussing Graham-Dodd investment styles, which are a subset of long-term financial investment styles, which are themselves a subset of the market. [1] https://en.m.wikipedia.org/wiki/Price_discovery https://en.m.wikipedia.org/wiki/Price_discovery
- deleted 10y ago[deleted]