Any number of covariant indicators depending on the model and what the modeler believes to improve the predictive power. Space, liquidity of the instrument, temperature, rainfall, salinity, underlying instruments, etc.
"Rational" is a teleological concern; I don't really care if markets are rational or not. They are conditionally predictable.Are you making an argument that markets are rational and predictable?
That definition of value, if I'm reading you correctly, is subjective and useless.Your use of value is technically correct, but I was referring to value as value to society (goods and/or services), and a lot of the market action today has nothing to do with that type of value.
In other words, "true value" is some subjective measure taken that permits you to sustain the argument that the take extracted in its trade is unjustified.Got it, that is just the way it is, that is how the system evolved so those in the know can make a lot of money that is often disassociated with the true value of a company's goods and services.
Objectively, there's no difference between the two. A stock price measures an aggregate demand, just as the price of an exchange traded derivative measures aggregate expectation of performance.The system still works if you look at from the optic of the stock's value, and not the underlying value of the company.
Specifically since it relies solely on your subjective estimation of value.Artifically determined value is a loaded phrase, agreed...
I mug you and take $50 dollars from you. Cops never find me. Have I artificially manipulated my cash pile by $50, or is that $50 real enough to buy a surf and turf dinner?...but there have been instances when stock prices have been "artifically" manipulated (in clear violation of the law).
Governments have been losing to commerce since the ratio of subject to flatfoot went above 10 to 1. Which is why the most heavily regulated economies--totalitarian ones--rely on collective and arbitrary depredation to keep black markets from thoroughly overwhelming their veneer of control.This has always happened, but it seems logical that the risks are greater now due to globalism and the coorisponding ability to move money rapidly around the globe. It may be impossible for governments to effectively regulate this behavior.
Nada; and I try as often as possible to steer people away from pop finance and economics books.Are you the author of a "Random Walk on Wall Street"?
There's no evidence that the market is more volatile today than it was in previous years. Our understanding of volatility has improved, which may contribute to the spectrum running from mere insecurity to outright panic over more visible fluctuation.Agreed again, but at least it seemed that market conditions were somewhat more predictable then, and if the old rules no longer apply, what has changed? Why has it changed? And is that change good?
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