On Tue, 9 Mar 2004 09:46:12 -0500, Doug Henwood wrote: > > Over the last 15 years or so, the price of oil has > varied from under > $10 to over $30. It may be that the Ricardian/Marxian > mechanisms you > and Bina point to determine the center of gravity > around which the > market price fluctuates, but what accounts for this > 300%+ range? > > Doug
Fischer Black used to call the stock market "efficient" because in his view it was almost always between 50% and 200% of fair value (he wasn't joking either; this was seriously his view and he nevertheless believed that the stock market was informative and regarded himself as an efficient markets/rational expectations believer). A range of 10-30 would be small compared to this and if one took the view, one wouldn't need a model of the fluctuation other than an anchor price around $20 plus "noise". Black's views on this subject were not exactly mainstream, however ... dd
