[COMMENT: This article includes some great content, including debunking the old Efficient Markets Hypothesis (EMH), and discussing the weight of opinion of the real market participants. Commentators and analysts can talk all they like about fair value, and earning forecasts, etc., but if they don’t have their own money in the markets then they are only sharing their opinion. The market participants who put money into the markets (especially their own money) are the ones whose opinions are important – because those opinions are recorded in the price charts.]
(1 November 2017, AFR, p31, by Michael McCarthy)
‘Recent moves in key global markets are flashing signals to investors. Traders and technical analysts who study markets often view basic price movements as a key analytical tool. Traditionally, this was a function of the old school of economics’ efficient markets hypothesis. The rise of behavioural finance theories debunks much of the classical understanding of markets, but the popularity of ‘price action’ is undiminished. The newer understanding of markets is that prices for shares, bonds and other assets are a function of crowd behaviour. They are nothing more than a mass expression of opinion. They are no doubt sincere. After all, people and institutions are putting their money behind these opinions. The price of any traded good is therefore the product of crowd behaviour, an organic process.’
‘Behavioural finance…’ <snipped…>
‘Interest rate traders have doubted central banks’ resolve…’ <snipped…>
The higher bond markets are signalling a…’ <snipped…>
”Industrial commodities are moving higher. Oil is still well below…’ <snipped…>
‘ What does this mean for investors? These market moves are primary evidence of a growing perception of a move into . . .’
Aussie Sharemarket Barometer 
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