Comments on: Been So Low

By: John Scalzi

John Scalzi — Fri, 28 Nov 2008 22:46:30 +0000

Well, no. Point in fact, since Obama's press conferences, specifically about the economy and introducing his economic team, the markets have been up, and if you check with people who follow the markets, they will tell you that much of it has to do with who he is naming and the actions he is taking and sharing in his press conferences. Whereas prior to his discussing his team and his plans, the markets were tanking, for reasons that had very little to do with the election. In short, you're assessing blame where it is not due, and neglecting to provide credit when it is. I understand it might pain you that "The One," as you so derisively call him, might have a beneficial effect on the markets through his choices (and his press conferences to discuss them), but just because you would rather not acknowledge it doesn't mean it's not happening. Incidentally, the markets are up today by over a hundred, the fifth day of market increases.

By: Barry From Chicago

Barry From Chicago — Fri, 28 Nov 2008 19:09:40 +0000

On November 4 the Dow was above 9500, and was showing signs of a recovery from the mortage collapse (thanks, Barney!). Once the election returns came in, it plunged 20 percent over two weeks. The Dow still hasn’t recovered its pre-election value. You may believe the One has the power to raise stock prices merely by holding press conferences; the facts suggest otherwise.

By: John Scalzi

John Scalzi — Thu, 27 Nov 2008 06:18:25 +0000

Well, actually, since Obama’s been having daily press conferences on the economy, the market’s been up each day, by an average of couple hundred points each day. So that would seem to deflate your argument quite a bit, I’d say.

By: Barry From Chicago

Barry From Chicago — Thu, 27 Nov 2008 04:17:35 +0000

Funny how it’s been in such a steady decline since the beginning of the month. Almost as if the investors don’t actually believe Obama’s going to use the Ring to bring peace and prosperity.

By: Tully

Tully — Sat, 22 Nov 2008 03:34:04 +0000

Anyone know some good books to read about the psychology of the economic downswing we are seeing? It seems like fear, rather than fundamental shifts in economic processes, are driving a lot of this. Go straight for the classics, Todd.

By: Jules

Jules — Fri, 21 Nov 2008 23:37:56 +0000

Todd Stull @37: Unfortunately, that kind of thing is mostly considered to be on the fringe of real science (economists, apparently, are mostly of the opinion that psychological factors have no real impact on pricing — see the “efficient market hypothesis”), so much of the writing on the subject swings wildly from totally logical in one paragraph to out-and-out wacko in the next.

Personally, I believe that psychology is a key factor in what drives market prices, and I find some of the stuff the Elliot Wave crowd say interesting, although I have to dismiss a lot of it as junk, too. With that in mind, Robert Prechter wrote a few books back around 2000/2001 when he started forecasting a big downturn about the kinds of psychology that would dominate. They make interesting reading, although you have to understand and constantly remind yourself that it’s all hypothesis without real science behind it.

By: Jules

Jules — Fri, 21 Nov 2008 23:32:23 +0000

I wrote:

“Prediction for tomorrow: market will open lower than close today, perhaps drop a little more over the first hour of trading, but will then rally, and finish maybe 100 points up.”

Hmm. Rally was a little later than I predicted. And somewhat stronger. I really wasn’t expecting 500 points up, even after 2 days in a row of 400 down.

By: jre

jre — Fri, 21 Nov 2008 21:18:50 +0000

And, no, I didn't mean to imply that the new administration will be delivering a shot of penicillin to clear up the legacy of this administration's excesses, but maybe I should have.

By: jre

jre — Fri, 21 Nov 2008 21:15:06 +0000

And, or course, the market felt a little more bubbly today. Four- and five-hundred-point swings, up or down, are not the real problem (although they wear on the nerves). It's the self-fulfilling expectation of more declines to come. Assuming no systemic meltdown (a big assumption, but whaddya gonna do?) a recovery is expected in two to four quarters, and the market will reflect that expectation somewhat earlier. Obama & Co. can help matters by saying all the right things, and delivering a shot of money to the economy's backside at regular intervals until then.

By: Stuart Clark

Stuart Clark — Fri, 21 Nov 2008 19:18:01 +0000

Todd, It’s not related to the economy at all, but if you haven’t read Malcolm Gladwell’s “The Tipping Point” – that’s an interesting foray into group psychology/dynamics.