Sep

28

 Today was a perfect day in the way expectations work. I don't fully know how they work but some of these factors were involved.

1. Market started way down Monday for fear that Trump would win the debate. The old accepted thing is always what the market wants even if it's creeping socialism and higher service rates.

2. Then on Tuesday evening, the market went down 1/2 % before the debate on fear that Trump would win. Fear always causes stops to be run.

3. Then during the debate, the market went up 20 points as it became obvious that the cattleist was winning and that trump was rambling, and interrupting, and proud of fact that he made money by stiffing people, and buying foreclosed houses, and not paying service.

4. Then the market went down 26 points to the open on the theory that you should buy the rumour and sell the news. Sort of a variant of "the threat is worse than the execution". Often good news i.e that the cattleist won, is worse than bad news. Of course often the good news is known in advance by flexions and they sell after it. Of course some people might have sold because the realization that the cattleist would win means that after-tax capital gains will be lower and regulation will be higher.

5. Then the market went up 10 quick points from the open to show that they were happy after all with the cattleist and to take profits from those who were stopped out at the open.

6. Then the market dropped a quick 5 points to recapitulate yesterdays and the prior days decline. People suffer from the remembrance of last 2 events effect or whatever absurd name Kahneman specifically gives it [Ed.: recency bias?].

7. Then finally the market advanced to where it was after the debate, letting no good opportunity for a stop or profit go unheeded. And it ain't over yet. Only a Brett can make sense of it all.


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