Traders,Investors and Capitalism

The headlines today shout about May being the worst month in a year for stocks. True enough but the implication is that means something. Since the start of 2008 the number of up and down months are roughly equal but gains during the up months have substantially outpaced the losses in the poor months. such is the nature of markets. It bears repeating that day to day and even month to month price movements are largely the result of traders not investors.

I saw a very good 8 minute interview with Dr. Gene Fama (U of Chicago finance professor) that distills quite clearly the essence of capitalism and the efficient market hypothesis (which he is credited with creating). Well worth the time. Here is the link.