The Market Is Always Correct

[Garpal Gumnut]

For those discombobulated by recent wild swings in commodity and stock markets.

Remember.

Mr. Market is always correct.

gg

 

[SirRumpole]

Correct in terms of what ?

It probably reflects sentiment, not necessarily value.

 

[frugal.rock]

Mr. Market is always correct.

MRS. Market disagrees.

 

[cynic]

MRS. Market disagrees.

Only because Ms. Market has a well established reputation for FTSEing Mr. Market over, and over, again and again and again.

Hence the reason why Mr. Market is seldom correct. This is well evidenced by the many corrections, to which, market participants, are repeatedly subjected.

 

[Dona Ferentes]

For those discombobulated by recent wild swings in commodity and stock markets.

Mr. Market is always correct.

The customer is always correct!? No, the customer is always the customer.

 

[frugal.rock]

The customer is always correct!? No, the customer is always the customer.

 

[InsvestoBoy]

I mean, I remember the XJO hitting all time total return highs in early Feb 2020 while China was shutting down their entire economy.

I don't remember thinking to myself "the market is always correct" while buying ATM puts on STW to hedge my entire equity portfolio at an ASX VIX of 12...what I remember is "boy these June puts sure seem cheap"

 

[wayneL]

The market is the aggregate of its participants. In modern markets we should think very deeply about who the participants actually are and what their power is.

Having performed that analysis then, we must realise that modern markets are not really true instruments of price discovery, but a reflection of the goals of the predominant players.

 

[Dona Ferentes]

The market is the aggregate of its participants. In modern markets we should think very deeply about who the participants actually are and what their power is.
Having performed that analysis then, we must realise that modern markets are not really true instruments of price discovery, but a reflection of the goals of the predominant players.

that is true. and in 'the market' there are many sectors

And the Reading for today, while focusing on gold, makes some interesting points on other asset classes:

Although inflation, debt, and war are not driving the price of gold. What’s driving gold is simply the chart. Gold trades more technically than any other asset. Commodities in general trade very technically, and I tend to succeed with commodities more than stocks, which trade in a much more efficient market.

The one thing you need to understand about gold is that 99% of the flows are speculative—price discovery takes place in the futures market, where an entire year’s worth of mine production can trade in one day. GLD and gold equities are also large, but nothing compared to the futures market. And the big players in the futures market can push the price around significantly. For years, they pushed it lower. Now, they are being forced to cover and push it higher.

 

[frugal.rock]

Forget the "modern markets" business, shenanigans have been around since markets existed.
Maybe not on day 1 though, probably day 2 or 3 when the "scheisters" worked out what to do and how to do it...

The modern thing is just much speedier and harder to prove the manipulation.

 

[wayneL]

Forget the "modern markets" business, shenanigans have been around since markets existed.
Maybe not on day 1 though, probably day 2 or 3 when the "scheisters" worked out what to do and how to do it...

The modern thing is just much speedier and harder to prove the manipulation.

Yeahbutno.

Agree with the general trust of your post and with the speedy execution thing.

But... technology and this speedy execution thing has dramatically empowered certain players.

We all know that the PPT has been around and active a hell of a long time, but government and central bank involvement in the market has gone well beyond that now.

Hence, the bear case as espoused by... The bears, though fundamentally valid, has no chance of playing out in reality.

This is not without consequence, but we should look for the deleterious effects elsewhere, other than stock and RE markets sh¹ting themselves in a big way.

I'm keeping a close eye on debt and fiat both in absolute and relative terms.

Until something changes in a big way there, keep buying the farken dips... And cover thine @ss.

 

[InsvestoBoy]

And the Reading for today, while focusing on gold, makes some interesting points on other asset classes:

Although inflation, debt, and war are not driving the price of gold. What’s driving gold is simply the chart. Gold trades more technically than any other asset. Commodities in general trade very technically, and I tend to succeed with commodities more than stocks, which trade in a much more efficient market.

The one thing you need to understand about gold is that 99% of the flows are speculative—price discovery takes place in the futures market, where an entire year’s worth of mine production can trade in one day. GLD and gold equities are also large, but nothing compared to the futures market. And the big players in the futures market can push the price around significantly. For years, they pushed it lower. Now, they are being forced to cover and push it higher.

These kind of tempting narratives are so easy to quantitatively debunk. People making these kind of claims should be ignored.

It's largely real interest rates that drive gold prices and to a much lesser extent, long term energy prices.

Claims that futures markets participants pushed the price of gold lower is kind of absurd when you look at a chart.

 

[InsvestoBoy]

Here it is in AUD

 

[Country Lad]

For those discombobulated by recent wild swings in commodity and stock markets.

Remember.

Mr. Market is always correct.

gg

@Garpal Gumnut, of course the market is correct. On any given day its moving (or not moving) in a direction that individuals may think is wrong or illogical. So who is wrong? Not the market - it is doing what it is doing so it must be right. Could it just be that there are a million people with different views on what it should be doing but who is to say these (biased) views are correct?

The market finishes the day at a certain point. It does not reset until there is more data. We reset our views and opinions to cater for what the market has done and then readjust our thinking to conform to what we think is tomorrow's market direction. If the market moves differently than we are wrong, not the market.

So, the market is always correct because it is doing what it is doing.

 

[Logique2]

For those discombobulated by recent wild swings in commodity and stock markets.

Remember.

Mr. Market is always correct.

gg

Yes it is. In addition, the past week highlights another truism, the market sells the rumour and buys the fact.

Domestic fall-out of the West's economic sanctions:
- folks, fill up the SUV right away
- stock up on flour and weet bix
- and on import electrical devices
- and buy that Euro luxury, or any used car, right away
- the middle aisle at the German supermarket, it's going to thin out -but through no fault of theirs (exchange rates)
Cheers L2

 

[Value Collector]

For those discombobulated by recent wild swings in commodity and stock markets.

Remember.

Mr. Market is always correct.

gg

If the market was correct, eg the current prices reflected the future out put of the companies discounted back to today, then prices wouldn’t swing wildly.

To believe that the market is correct is to believe that humans no longer are affected by fear or greed, so far I haven’t seen any evidence that those to powerful emotions have disappeared from the human condition.

 

[stanwell]

I wrote on my Twitter this morning

"Market is the fundamental, price is always right. Follow the market."

One of my followers was not impressed and unfollowed me.

 

[JohnDe]

I wrote on my Twitter this morning

"Market is the fundamental, price is always right. Follow the market."

One of my followers was not impressed and unfollowed me.

Probably because most people don't like following someone walk off a cliff, it's better to be a few steps behind and watch what happens.

 

[mullokintyre]

Margaret Thatcher in one of her more quotable quotes.
Mick

 

[divs4ever]

Margaret Thatcher in one of her more quotable quotes.
View attachment 157391Mick

does that make Russia the new ( coming ) super power , because there aren't many FREE-markets left , and Russia may achieve ' Bradbury status ( the only unrigged market left standing )