I have one fleeting thought about the GNP numbers and many similar numbers. What does the weakness of the economy (presumably caused by the bailouts and uncertainties of how to pay for money printed by the Fed), have to do with the likely course of the stock market? Is it bullish or bearish for the future? Have bad numbers for GNP been good or bad for the stock market? The stock market look ahead to future discounted earnings over a long period. The Gordon model et al. Similarly for other releases. Empirically and theoretically the good or bad numbers have to be tested as to their impact.

In the trend following paper Rocky asked me to review, they point out that if trend following works, it's a true violation of efficient markets because the prices should homeostasize. And the impact of exacerbating a move from homeostasis should be particularly unprofitable. But they claim it isn't. Especially in the 19th century and the 1970s or some such. And sometimes in grains et al as Jeff can attest. I agree with their idea that it should be particularly unprofitable. And that's why it's so profitable to go against the temporary moves to economic numbers which often in a day cover 1/5 or 1 /10 of the total move of stock markets in a year.


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