Who is the market?
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.