LOONY TUNES no. 143

1

Jaap van Dam posts (17 June) on Top 1000 Funds.com

HERE

"Long Horizon Investors a Crazy Bunch"

“When I went to university, I studied finance. I was taught efficient markets theory, the capital asset pricing model (CAPM) and arbitrage pricing theory (APT). No mention of fundamental investing at all. It was like a religion. Lots of Fama, Ross, Sharpe. And I subscribed to the religion. … Also, efficient market thinking has led us to believe that the market, by its invisible hand, will magically steer corporate management towards creating maximum long-term shareholder wealth, by allocating the capital of the firm in the most productive way possible.”

Comment

Good thinking from Jaap van Dan. There is no invisible hand of the market.

2

LeapRate staff (24 June) on Leap Rate (‘your Forex Industry Source’) HERE

Why the oddsmakers were wrong in predicting the #VoteLeave Brexit victory

When asked once about why shares in his company were lagging, former Telegraph proprietor Conrad Black told analysts: The market is always right.

A fairly honest admission by an embattled CEO, but also very correct. When people have to put real money to work, the invisible hand of the market usually prices things correctly. Usually.

In predicting the outcome of yesterday’s UK Brexit referendum, however, the market wasn’t right at all. In fact it was way off.”

Comment

The 30 million voters who decided the outcome of the referendum were in no way connected in any way to those who bet on the result. There is no ’invisible hand’ of the market, nor is there in betting.

3

F169NNS: HERE 

“Brexit is the result of the invisible hand of Trump at work - his hands are so small, they’re invisible.”

4

Ivan Ilan posts on equities.com HERE

Brexit: The Invisible Hand Smacks Global Markets

“Governments and their related bureaucracies have less control today than yesterday on an individual or entity’s pursuit of economic profit – which is a fundamental win for Adam Smith’s formidable invisible hand.”

5

Dr Binoy Kampmark posts on CounterCurrents.org HERE

“The markets got it so wrong,” came one CNN pundit reporting on the various erosions of the European stock market.  Assumptions of the all wise market deity continued to come out, as if the market has body, soul and form. If the Brexit vote should have taught such figures anything, it is that the market is neither divine nor particular democratic in the way it fiddles with its invisible hand.”