Friday, August 26, 2016

Doug Kass posts (25 August) on Real Clear Markets 
“Sell Your Stocks In September, or Get Dismembered?”
I issued a warning recently about the market's direction in autumn, writing:
"Nearly to a soul (with the exception of the perma-bull cabal), my bearish, neutral and mildly bullish friends are all frustrated by the absence of natural price discovery in the bond and stock markets.
And based on the last few trading days, the 'invisible hand' might be here for a while longer. At least, until it isn't.
Besides the fundamental and economic risks, the suppression in interest rates and volatility are leading to the loss of ever more market participants -- something not in the Fed's textbooks.
Sell in September or get dismembered?"
-- Doug's Daily Diary, Sell In September or Get Dismembered? (Aug. 23, 2016)
Individuals buy and sell shares, some join and some leave. Prices are decided by the net aggregate of the actions of individuals. That’s how markets work. There is no ‘invisible hand’ acting independently of what individuals do in aggregate. 
Markets function by VISIBLE prices. There is no steady equilibrium. The 'Marshalilan' supply and demand 'cross' as per his famous diagram and as taught in Econ 101. Market prices can change in milliseconds and/or in different time periods.
For the sake of graphical and mathematical precision, modern economists lost touch with reality.


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