Doug wrote:
> There's a curious asymmetry here.
> When the markets are zooming
> upwards, it's meaningless
> speculation. When they're
> collapsing, it's fraught with
> meaning.
I don't see the inconsistency in saying that speculation disconnects
asset prices from long-run fundamentals and that their collapse bring
them down to earth. In that sense, the up is like moving to a fantasy
world ("meaningless speculation") while the down is like coming back
to reality ("fraught with meaning"). We may not know with certainty
what the fundamentals are at a given time, but if there were no
fundamentals, how would we explain the system's permanence?
> This could be something serious,
> but then again it could just be
> a problem that's getting amplified
> by extreme emotions. Who knows?
Just like extreme emotions unglued asset prices from their
fundamentals, extreme emotions may be snapping them back in place --
somewhat and temporarily.
Doug is right in emphasizing the uncertainty surrounding all these
events. But we need to update our priors as evidence piles up.
