Set forth below is the text of a comment that I recently posted to the discussion thread for another blog entry at this site:
And of course none of this matters because it’s the sophisticated Wall Street firms that set the prices. They’re not getting emotional. They’re making cold, hard, data driven calculations.
We disagree, Anonymous.
The sophisticated Wall Street firms take into consideration what the majority of investors believe in everything they do. They want to make money in the short term. If they didn’t care about the short term, they would be driven out of business by competitors. They are forced to consider what the majority of investors believe whether they like the idea or not. And most are probably fine with doing so, at least today.
I believe that there will be a change following the next price crash. I believe that at that time the Ban on Honest Posting will be removed and millions of ordinary investors will learn what the last 35 years of peer-reviewed research in this field says. The firms that you are speaking of will then of course take that into account in the decisions they make. And the textbooks used in the schools attended by the people who work at these fields will be updated to reflect the last 35 years of research. And so the Wall Street people will be more inclined to focus on the long term even when the majority of investors is not so inclined.
The fact that we are not there today does not tell us that we will never get there. Knowledge advances over time. The last 35 years of peer-reviewed research points to a very big advance.
And I don’t even a tiny bit agree with your claim that these Wall Street people are cold, calculating machines. They would like you to think that. They work hard to create that impression. The reality is that they are humans too and they have emotions like all the rest of us. They may well be better educated humans re this particular topic. But of course when the ideas in the textbooks they are working from were developed in an era prior to when the most important research was published, their educations count as a negative rather than a positive.
There is no such thing as a 100 percent emotion-free human.
That’s my sincere take in any event.
I naturally wish you all good things.