Market Myths

Fairy Tales Mislead Investors of All Types

The world of investment is a hothouse of myths that belie the reality of the financial markets as well as the real economy. The billow of fairy tales pervades the entire
landscape, ranging from stocks and futures to commodities and currencies.

The bluster of fiction serves to fuddle and stymie investors of all breeds. The players in a bind include newcomers dabbling in the market in their spare time as well as veterans bent on trading the whole day long.

The worst of the folklore can be traced to a pile of voodoo spawned by the high priests of financial economics. The tall tales spun by the hoary clergy run the gamut from the
mystique of random walks to the impossibility of superior returns.

Not surprisingly, the heap of bunk confuses rather than enlightens the luckless investors. In fact, a host of shibboleths do not merely distort the reality but contradict the facts entirely. The hail of obfuscation feeds a quagmire that’s in many ways more slippery and treacherous than most people suspect.

On the upside, though, the financial forum is not as fickle or mystic as it appears to lots of folks, be they wild-eyed tyros or jaded pros. To approach the field in a cogent way, the earnest player can take concrete steps to sort out the wheat from the chaff, the signal from the noise. In thrashing out a sound trail through the thicket of hokum, the first task of the investor is to thresh out the solid facts from the mushy yarns piled high and wide throughout the landscape.

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Market Cycles

 Causes and Effects of Waves 
 in the 
 Financial Forum and Real Economy 

A host of market cycles crop up in the financial forum as well as the real economy. In fact, the two domains of the virtual and tangible are interlinked in myriads of ways. As an example, the action in the stock market depends for the most part on events taking place in the external environment. In the opposite direction, the goings-on in the financial arena affect the vitality of the economy at large.

Looking at the big picture, the whole environment – made up of natural forces as well as human factors – plays a crucial role throughout the marketplace. A showcase lies in the impact of the weather on concrete goods as well as virtual assets. For instance, the onset of winter kindles the demand for heating, the prospect of which prods merchants in the commercial realm and traders in the futures market into bidding up the price of oil in advance.

In these ways a heap of cyclic themes show up everywhere, from stocks and bonds in the capital markets to crops and toys in the real economy. Moreover, the hardy motifs span the spectrum of time scales, from less than a month to more than a decade.

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