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darksaints 15 hours ago [-]
> At one time, the stock market was closed at night and yet market indices often changed dramatically, even without a single share being traded. A hundred years ago, the Dow might close one day at 243 and open the following morning at 227, reflecting bearish overnight news. In that case, it is fairly obvious that the market moves on new information, not trading activity. To the extent that trading activity has any impact on prices, it is due to what the trading reveals about information held by various participants in the market.
Markets open using an auction: before the market opens, a bunch of bidders declare the price/qty they’re willing to buy at, a bunch of sellers declare the price/qty they’re willing to sell at, and at the moment the market opens, a single multi-party transaction happens immediately at the implied market clearing price. That transaction is special: it’s not attributed to any particular buyer or seller in transaction data feeds, and typically has a tick volume 1000x (or more) higher than the median tick volume during trading hours.
It may appear that markets are opening at different levels merely on new information, and new information absolutely affects it, and that market jump may not appear to move like the typical brownish motion of active markets… but that opening price is nonetheless the result of buying and selling.
kazinator 11 hours ago [-]
OK, but the bids and asks that are established in this closed-over-night market are themselves based on something. And since trading activity is not going on, they are not based on trading activity. I think that's the article author's point, which seems to make sense.
It doesn't prove that trading is not (also) based on trading activity when the market is not closed.
curtisblaine 14 hours ago [-]
Do you mean traders set up buy or sell orders and they get matched when market opens? That's... Just how markets work normally?
atomicnumber3 13 hours ago [-]
Yes and no. There's a distinct auction that runs and it is a distinct event and has its own rules. Eg 5 mins (idr exactly, it's been 6 years for me) before the opening cross you can no longer cancel auction orders, post-only. At the open, they run an opening match of all the auction orders, THEN normal trading begins.
Redster 4 days ago [-]
Tautologies are beautiful and helpful because they help people and are full of beauty.
jschveibinz 14 hours ago [-]
Thank you
oliculipolicula 1 days ago [-]
Trying to reword your joke to one more aligned with TFA's:
Tautologies are B&H because they confound intuition (H) AND are truthful (B)
NGL, I made use of following tautology
Beauty is truth, truth beauty,—that is all
Ye know on earth, and all ye need to know.
Author in comments:
Fair point. I suppose I decided to use the term tautology for the same reason I embrace "[liberalism=]neoliberalism", to defend a term that is often unfairly maligned.
11 hours ago [-]
plesn 12 hours ago [-]
This seems to me like Ideology disguised as Tautology.
"Saving = Investment" is an accounting identity and not a causal law.
He shifts by implying that 'saving' drives 'investment'. In accounting even unsold inventories are forced into the 'investment' bucket.
u1hcw9nx 15 hours ago [-]
Tautologies are useful to detect errors in reasoning, but not necessarily in actual policy.
The problem with tautologies is that usually the context where they are useful is very small.
As an example, lets use Equation of Exchange and Cambridge Equation. Defining "Money" (M in the equation) has become nearly impossible when there are so many liquid assets and instruments that act money like. Central banks can't reliably measure or control a single "quantity of money" in a way that reliably links to GDP. And because it's not causal model, just an equation, it does not explain anything interesting. All interesting questions are causal.
plesn 11 hours ago [-]
"All interesting questions are causal."
I like that punchline !
MarkusQ 13 hours ago [-]
It would help if the variables were defined somewhere near their point of use. Economists may have dedicated uses for P & Y as well known (to them) as π, but to the casual reader they are...just letters?
jansenmac 13 hours ago [-]
Math is nothing but tautologies.
“The logic of the world, which is shown in tautologies by the propositions of logic, is shown in equations by mathematics.” Wittgenstein in Tractatus Logico Philosphicus (6.22)
Mithriil 8 hours ago [-]
And what the author goes and shows are equalities, not tautologies.
hahahaa 14 hours ago [-]
If a stock tanks is it sellers with info selling to market makers? So a sell off.
zipy124 15 hours ago [-]
Honestly I think any economic minister, such as the chancellor in the UK should be required to read this. It's amazing in a time when they champion growth, without understanding these relationships.
nstents 16 hours ago [-]
I love a good tautology like Clarke's "Any sufficiently advanced technology is indistinguishable from magic", but sometimes enough is enough!
hahahaa 14 hours ago [-]
Sufficiently quits. He is doing too much work in that sentence.
Markets open using an auction: before the market opens, a bunch of bidders declare the price/qty they’re willing to buy at, a bunch of sellers declare the price/qty they’re willing to sell at, and at the moment the market opens, a single multi-party transaction happens immediately at the implied market clearing price. That transaction is special: it’s not attributed to any particular buyer or seller in transaction data feeds, and typically has a tick volume 1000x (or more) higher than the median tick volume during trading hours.
It may appear that markets are opening at different levels merely on new information, and new information absolutely affects it, and that market jump may not appear to move like the typical brownish motion of active markets… but that opening price is nonetheless the result of buying and selling.
It doesn't prove that trading is not (also) based on trading activity when the market is not closed.
Beauty is truth, truth beauty,—that is all Ye know on earth, and all ye need to know.
https://www.poetryfoundation.org/poems/44477/ode-on-a-grecia...
Author in comments: Fair point. I suppose I decided to use the term tautology for the same reason I embrace "[liberalism=]neoliberalism", to defend a term that is often unfairly maligned.
"Saving = Investment" is an accounting identity and not a causal law. He shifts by implying that 'saving' drives 'investment'. In accounting even unsold inventories are forced into the 'investment' bucket.
The problem with tautologies is that usually the context where they are useful is very small.
As an example, lets use Equation of Exchange and Cambridge Equation. Defining "Money" (M in the equation) has become nearly impossible when there are so many liquid assets and instruments that act money like. Central banks can't reliably measure or control a single "quantity of money" in a way that reliably links to GDP. And because it's not causal model, just an equation, it does not explain anything interesting. All interesting questions are causal.
“The logic of the world, which is shown in tautologies by the propositions of logic, is shown in equations by mathematics.” Wittgenstein in Tractatus Logico Philosphicus (6.22)