Sandhusker
Well-known member
I guess that what I'm trying to say (and having a hard time articulating) is that, between the two, the stock market more accurately reflects the perception of our economy, (perception because stock are bought/sold on the preception of how that company will do in the future) but that the commodity markets are more prone to distort the fundamentals because of the reletively small market.
At any given time, I'd say the stocks were closer to being right than the commodities simply because of the volume and number of participants. Kind of like using 2 or 100 samples to determine an average. If you've got 10 big money guys who think a certain company is going to do well, they'll buy stock and will influence the price a little. However, if you have the same number of guys who think oil will go up and they start buying contracts, they can move that market a lot. Since the futures prices have a heavy influence on spot prices, it's clear that big money with a wild hair can really distort the fundamentals.
I'm not saing there is a contract that covers every product, but there doesn't have to be to effect that product because of the synergies involved. Look at oil, it effects virtually everything.
Yep, there was a dot-com bubble the popped. It wasn't the first such deal like that nor will it be the last. That was a case of irrational exuberance on faulty perceptions. The guys that watched their charts and shorted under support are drinking rum out of coconuts with the native girls now. In contrast, I'm going to eat a couple corn-dogs and then go brand in damp, windy 40 degree weather! :lol:
At any given time, I'd say the stocks were closer to being right than the commodities simply because of the volume and number of participants. Kind of like using 2 or 100 samples to determine an average. If you've got 10 big money guys who think a certain company is going to do well, they'll buy stock and will influence the price a little. However, if you have the same number of guys who think oil will go up and they start buying contracts, they can move that market a lot. Since the futures prices have a heavy influence on spot prices, it's clear that big money with a wild hair can really distort the fundamentals.
I'm not saing there is a contract that covers every product, but there doesn't have to be to effect that product because of the synergies involved. Look at oil, it effects virtually everything.
Yep, there was a dot-com bubble the popped. It wasn't the first such deal like that nor will it be the last. That was a case of irrational exuberance on faulty perceptions. The guys that watched their charts and shorted under support are drinking rum out of coconuts with the native girls now. In contrast, I'm going to eat a couple corn-dogs and then go brand in damp, windy 40 degree weather! :lol: