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> If the economy can change that much over the weekend, then the traders, stockbrokers, Wall Street, whoever, is doing a pretty poor job at pricing companies.
by jcfrei 2y ago
> If the economy can change that much over the weekend, then the traders, stockbrokers, Wall Street, whoever, is doing a pretty poor job at pricing companies.
The opposite is true, if they didn't move much within a short period of time then the market would likely not be very efficient. The inefficient part is all the rest, labour markets taking time to adjust, governments changing policies, central banks injecting / removing liquidity. Things change fast in the real world all the time - markets are just usually the first to reflect it.
- mrweasel 2y ago> markets are just usually the first to reflect it. Maybe, but they have a history of overreacting to pretty much everything. Prices drop 10%+ in a day, without actually waiting to see if policy changes will be implemented. Frequently the market drops pretty massively, only to recover within a few weeks. I have a romanticised view of the stock market, where people invest long term, in companies they believe in. The real stock market will punish a company if it makes a decent profit, if that profit is less than someone guessed 12 months in advance. Maybe the stock market needs to move away from HFT and focus things 2 - 5 years into the future. Imagine if you could only sell stocks at the end of each quarter. Short term think hasn't exactly left us in a good place.
- gpderetta 2y ago> Imagine if you could only sell stocks at the end of each quarter. how would you prevent people from doing that outside of the stock markets? Possibly on markets in other countries or with derived instruments? The only effect would be the loss of transparency.