Whisky Tango Foxtrot, Over?

[chris_gerrib]

So, there is a theory in finance called rational market hypothesis. The theory, to oversimplify slightly, says that a price of a publicly-traded security represents a rational analysis of all the known fundamental factors that effect the price.

If this is so, how on God's green Earth do you explain the last two day's stock market? Yesterday, bonds (specifically Treasury bonds) were downgraded, so the market sold stocks and bought bonds! Today, with no significant additional information, the stock market goes up 3.98%! Rational my ass - this is shear blind stupid panic!

Comments

[daveon.livejournal.com]

I suspect that this has partly been brought to us by our twin friends, Mr Day Trader and Mr Algorithmic Trading System who saw the downgrade news and dumped stock.

Now Mr I Do This for a Living has rushed back from the Hamptons they're buying back some stuff at bargain basement prices and congratulating themselves on their cleverness.

Progress

[(Anonymous)]

Once upon a time such a market move was known as a "panic."

Then it was renamed the less scary "Depression" until that became even more scary...

At which point it was renamed yet again as "recession."

And no, recent moves don't seem terribly rational.

"Panic" anyone?