Home > #OWS, finance > Who is the market?

Who is the market?

April 7, 2012

Oftentimes you’ll read an article in the middle of a market day about how “the market is responding” to the jobs report, or the manufacturing index, or sentiment reports. That kind of makes sense – it is shorthand for the fact that the people betting on the market are, as a group, reacting and changing their bets based on new news. If the expectation was for 200,000 jobs to be added but only 120,000 jobs were added, you’d expect disappointment and a drop in the S&P index.

Even so, this language is pretty confusing, since it’s certainly not true that everyone who invests in the market is doing this – most people with money in the market don’t do anything at all on a given day. Okay then, let’s interpret it as meaning something kind of reasonable like, “of those people who respond to this news by changing their bets, a majority of them are betting in one way which is moving the market.”

It still may not be true, since people who are seriously involved with the market typically don’t have the same expectations as what the official expectation report says – that report may have contained no surprising news at all, but one hedge fund liquidating their portfolio may be dominating the market. So even if there is a reasonable interpretation, the chances are it’s vapid.

Other times you’ll read an article, probably put out by Bloomberg, about how the market is “recalibrating,” or “taking stock” after a rise. This is where I get confused. It’s like I’m expected to imagine a huge man, hunched over thinking about what to do next.

But what does that really mean? As far as I can tell, nothing at all. There’s no man, there are no little men behind the wall representing this man, and everyone betting on the market is just doing their thing. It’s maybe just a way of writing a story because the journalist was told to write a story and the market wasn’t doing anything.

But lately I’m wondering if there’s something more to it. Why are journalists covering the market allowed, day after day, to write vapid articles about the market? What is it about using language like this that makes us comforted?

My guess is that people want there to be such a man, and moreover want him to be understandable and reasonable.

It’s primarily a question of control – control over our lives, as if we can say, as long as we kind of get his (the market’s) sentiments, we can avoid catastrophic risks. Like in those human nature tests where 85% of people consider themselves better than average drivers, we feel that we understand the market and so we’re covered and safe. Even when there’s plenty of evidence that we don’t actually understand the risks, we continue the market myth out of this need to feel in control.

I also think there’s another, secondary effect of this personification. Namely, we feel like the system is massive and powerful and there’s nothing we can do to affect it. It makes us passive.

My friend Hannah, who’s an anthropologist and whom I met through Occupy, likes to say to people, “that good idea you’ve had that someone should do? It’s your idea, and you should do it! There’s no Occupy elf that will go do it for you just because it’s a good idea.” I love that sentiment, and the idea of Occupy elves (why aren’t there Occupy elves?).

It makes me realize how much we expect other people to do stuff just because it’s a good idea, when in fact from experience we should have learned by now that the stuff that gets done by other people is usually because it’s a good idea for them. Stuff that’s a good idea for us, or for everyone, we should consider our personal responsibility. The market is certainly not looking out for us.

Categories: #OWS, finance
  1. Larry Headlund
    April 7, 2012 at 9:01 am

    Not only is the market not a man who looks like Rodin’s creation, it is not man at all: algorithmic, computerized trading makes up the bulk of world trades. Snce the goal of such systems is to out guess the market (I.e. other algorithms) we have the kind highly non-linear, self referential system that if it were a man would be in great danger of disappearing into the very navel it is contemplating. Or into some orifice, anyway.

  2. JSE
    April 7, 2012 at 10:45 am

    Scientists must have an interesting bias in this direction; after all, when you have an idea about mathematics, it really is usually the case that someone else has already had the idea and pursued it.

    • April 7, 2012 at 12:17 pm

      I think mathematics is prone to the same phenomenon that Cathy is describing. Quite often I find myself representing an entire research community by a single idealized member, quite often a particular (real) leader in that community. I believe this leads to the same kind of false reasoning as Cathy describes. It can certainly lead to serious problems, e.g., young mathematicians who decide that they must find the “leader” and work on only that person’s projects as a way to impress an entire community, as opposed to exploring the breadth of a subject and finding projects interesting to themselves and some group within the community.

  3. wanderinginpr
    April 7, 2012 at 11:58 am

    Yeah, the personification makes us think there is a rational and predictable system in place – instead of admitting there are irrational, totally unpredicatable forces at work. I wonder what the percentage of “gamblers” on stock markets is compared to other people who don’t care or don’t have the money to invest?

  4. Deborah gieringer
    April 7, 2012 at 6:12 pm

    This reminds me of science shows on t v, you know, the ones about the sun or the planets, shows that insist on using metaphors of destruction in describing their subjects’ forces or components … As if the solar system’s sole purpose is to scare the bejesus out of us. At least once in awhile we might imagine that the universe is benevolently uninterested in us, and maybe just trying to have a nice day.

    • April 7, 2012 at 6:14 pm

      Ha! I like how you slipped the personification of the universe in there at the end.

      • Deborah gieringer
        April 8, 2012 at 9:23 am

        I’m very fond of personification …. I just hate to see it taken for granted, and I hate to see it get it a rut. So I don’t actually mind if it’s said that the market was thoughtfully correcting itself–as long as this figure of speech gets some thoughtfully corrective scrutiny (eg your column above) when it deserves it. Ditto the weather, volcanos, planets. Gee, I may even be arguing for MORE personification–but of the sort that challenges the assumptions built into the ones we start taking for granted.

  5. anon
    April 7, 2012 at 7:47 pm

    One day the Dow, S&P 500, and Nasdaq were all down, so next day the NY Times ran its usual story with people explaining why the market had gone down. There was one problem with this: the overall market had gone up.

  6. April 10, 2012 at 8:07 am

    ‘The market’ is just a crowdsourced opinion on price.

    At one level, the financial markets are where megatrends meet… technological revolutions like mobile/social, geopolitical like China… government policies, esp. monetary, drive where money is and needs to go. At another level, there are maybe 10,000 people with really big risky decisions to make and discretion to make them. And then there hundreds of thousands of speculative men and machines who vote with dollars on what they think the first two will do.

    Certain economists, and parts of the peanut gallery, do elevate it to some kind of sacred infallibility.

  7. April 11, 2012 at 5:59 am

    your observation about the elusive nature of “the market” reminds me of the comment attributed to Maggie Thatcher that “there was no such thing as society”. And of course diplomacy is filled with this way of thinking, as when we speak of “China’s response” or “Brazil’s efforts”. Coming to terms with collective human action is a challenge.

    • Larry Headlund
      April 12, 2012 at 11:22 am

      That “there was no such thing as society” sort of nominalism has consequences at least as bad as the anthropomorphising of society,the market, you name it: if there is no ‘society’ then it can have no rules, interests or norms people need concern themselves with. Myself, I say the market (society, etc.) is something but it is not like a person.

      By the way, Noahpinion (http://noahpinionblog.blogspot.com/2012/04/thursday-roundup-4122012.html) has a short apropo comment:
      “Stocks fell today on worries about blah-blah-blah.” No they didn’t. Stocks fell today, and you don’t really know why.

  1. April 9, 2012 at 12:18 pm
  2. April 9, 2012 at 6:09 pm
Comments are closed.
Follow

Get every new post delivered to your Inbox.

Join 1,739 other followers

%d bloggers like this: