> That the market can stay irrational longer than people can stay solvent is also true.
It's a myth that markets are irrational. It's a joke repeated amongst traders but fundamentally, we all know that markets simply aggregate all available information and reflect it in a price. A free market as a whole has rationality as its equilibrium: it's always telling you something true about the world.
To call the market irrational is a more humble claim than intended by those who quote it to aver that only they are rational, that is, it says: "I can't figure out what the market knows that I don't."
It means, "Those who couldn't hear the music assumed that those who were dancing were insane."
It's a myth that markets are irrational. It's a joke repeated amongst traders but fundamentally, we all know that markets simply aggregate all available information and reflect it in a price. A free market as a whole has rationality as its equilibrium: it's always telling you something true about the world.
To call the market irrational is a more humble claim than intended by those who quote it to aver that only they are rational, that is, it says: "I can't figure out what the market knows that I don't."
It means, "Those who couldn't hear the music assumed that those who were dancing were insane."