Irrationality: Bane of the Stock Market

Sometimes when I look at the stock market, I get awed and repulsed at the same time. Awed sometimes by the fact of pure capitalism at work. Tremendous amounts of money literally flowing between financial and corporate entities. Deals, trades, etc. The business of America is business, indeed.

Repulsed sometimes by the fact of pure capitalism at work. Tremendous amounts of money literally flowing between financial and corporate entities. Deals, trades, etc. The business of America is business, indeed yet knowing that if you aren’t a player, your just a unit of value being shuffled to and fro. The average American’s income is just a miniscule blip in the stock market. And players are going to play. Maybe Joe Six Pack gets shafted. Maybe not. But hey, who cares? Wheelin’ and dealin’ for the win! There’s more chips in the closet.

Alex Epstein, a junior fellow at the Ayn Rand Institute in Irvine, CA, said the following in a recent op-ed about Enron and businessmen in general:

…Enron’s problem was not that it was “too concerned” about profit, but that it believed money does not have to be made: it can be had simply by following one’s whims. The solution to prevent future Enrons, then, is not to teach (or force) CEOs to curb their profit-seeking; the desire to produce and trade valuable products is the essence of business–and of successful life.

Instead, we must teach businessmen the profound virtues money-making requires. Above all, we must teach them that one cannot profit by evading facts.

Very true words. And that’s scares me about the stock market: not greed but irrationality. Money has to be made and money doesn’t materialize out of ether. The stakes are high.

One Response to “Irrationality: Bane of the Stock Market”

1. gluphus says:

   December 23, 2005 at 3:05 pm

   http://www.financialsense.com/editorials/conrad/2005/1122.html

   hmmm….but the govt will no longer make it easy to keep track of how much of that money is “in play”…

   IMHO, this does not bode well for the citizen who actually earns those dead presidents.