30 March 2001 - market: genius

Why is the stock market so unpredictable? For the same reason that Leonardo da Vinci was unpredictable: It’s a genius! If the market is smarter than its participants, it follows that all those unexpected price swings that people blame on “investor psychology” or “surprising news” are really superintelligent, super-accurate estimates of the values of companies, and the market seems erratic because we can’t grasp its transcendent reasoning. If you disbelieve in the market, put on the dunce cap, because you’re forced to disbelieve in economists.

Imagine what we could find out if we invented a market that can talk! Assuming, of course, that it could bear to talk to us.