The Stock MarketThe Stock Market

Presentation copyright© 1997, 1998 by Barry and Deborah Brownstein

ForecastingForecasting

“..the knowledge of the circumstances of which we must make use never exists in the concentrated or integrated form…”

Q. In a ‘average’ year of interest volatility, if you invested a $1000 in treasury bill futures and were correct about the direction of interest rates for 52 straight weeks how much money would you have?

New Era or Mania?New Era or Mania? Mania- excessive or unreasonable enthusiasm-

stocks?, beanie babies and tulips ‘in normal market behavior the long-term

direction is up but it is interrupted by setbacks’ ‘a mania produces powerful persistent rises with

fewer setbacks, broad public participation and historic overvaluations by all traditional measures ‘

More Ideas To ConsiderMore Ideas To Consider

Markets are a spontaneous order and perhaps are inherently unpredictable, but not random

Do events drive markets?

– If you had tomorrow’s newspaper could you predict the market?

Speculation plays a positive role in markets

– only coercion creates a conflict between consumers and firms

Still More IdeasStill More Ideas

Most predictions are based upon past experience and thus miss turning points

That which ‘everybody’ knows has no entrepreneurial value

Limiting markets is generally a bad idea

– the complexity of markets is beyond rational planning (the pretense of knowledge)

Recommended ReadingRecommended Reading

The Edge of Chaos by Bernice Cohen Manias, Panics and Crashes by Charles

Kindleberger Extraordinary Popular Delusions and The

Madness of Crowds by Charles Mackay Money Meltdown by Judy Shelton America’s Great Depression by Murray

Rothbard