The Market is Irrational

The ‘flash crash’ 1,000-point drop in the Dow Jones back on May 6 got me thinking: the market is irrational. And by ‘market’, I don’t just mean the stock market.

A couple of years ago I bought a pumpkin at Thanksgiving for a pie. It was so good that, a few days after Thanksgiving, I went back the Local Supermarket to get another pumpkin, but noticed that they all were gone from the store. Next to the display of bananas I asked the manager where the pumpkins were and he told me that they had cleared them all out to make room for Christmas foods, now that Thanksgiving was over.

Think about how distorted that market is: I can buy bananas in New England in November, but not a pumpkin. The market is irrational.

(I don’t know why I’m thinking about this now, but if they can sell bananas in November, I can think about pumpkins in July.)

Advertisements



    Leave a Reply

    Fill in your details below or click an icon to log in:

    WordPress.com Logo

    You are commenting using your WordPress.com account. Log Out / Change )

    Twitter picture

    You are commenting using your Twitter account. Log Out / Change )

    Facebook photo

    You are commenting using your Facebook account. Log Out / Change )

    Google+ photo

    You are commenting using your Google+ account. Log Out / Change )

    Connecting to %s



%d bloggers like this: