Meaningless noise and systemically useless

DJIA                   Closing Value       Daily Change

Feb 3, 2016        16,336.66             183.12

Feb 2, 2016        16,153.54           -295.64

Feb 1, 2016         16,449.18             -17.12

Jan 29, 2016       16,466.30            396.66

Jan 28, 2016      16,069.64              125.18

Jan 27, 2016       15,944.46           -222.77

Jan 26, 2016     16,167.232                82.01

Jan 25, 2016       15,885.22            -208.29

Jan 22, 2016       16,093.51               210.83

Jan 21, 2016        15,882.68               115.94

Jan 20, 2016       15,766.74             -249.28

Jan 19, 2016       16,016.02                  27.94

Jan 15, 2016       15,988.08               -390.97

Jan 14, 2016       16,379.05                 227.64

Jan 13, 2016        16,151.41                -364.81

Jan 12, 2016        16,516.22                  117.65

Jan 11, 2016        16,398.57                    52.12

Jan 8, 2016          16,346.45               -167.65

Jan 7, 2016          16,514.10                -392.41

Jan 6, 2016         16,906.51                 -252.15

Jan 5, 2016         17,158.66                      9.72

Jan 4, 2016         17,148.94                -276.09

Dec 31, 2015       17,425.03

In 14 of the 22 trading days in the New Year, the Dow-Jones Industrial Average (DJIA) has swung more than 1%.

It is really doubtful that there is change in the underlying fundamentals every day that justifies a 1% per day swing (in either direction) in stock prices. Stock markets are not trading on news but on perceptions and emotions. That is not market efficiency. That is irrational gambling and systemically useless, even inefficient and even destabilising. Such price swings are pure noise and nothing else. What economic value does capital market behaviour like this really add?

These questions need to be asked.

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2 thoughts on “Meaningless noise and systemically useless

  1. Brilliant. I had my own share of problems with this daily following and tracking markets. And worse was to make sense of it in my reports! Someone told me amusingly why go to gamble in Las Vegas. One can do it legally wherever there are stock markets and sound really intelligent as well doing the same..

    Like

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