Summary
The longer I study economic phenomena, the more I learn two truths. The first truth is how little I know. This is very humbling. There is just too much information out there for any one human being to process. The second truth is that this abstract thing we call "the market" can and does do what no human being or computer can - it does process all the pertinent information.
I am in awe of markets. Take something as seemingly simple as the price of a barrel of oil. Like any market-derived price, the price of oil at any given moment results from the interplay of two forces - supply and demand. On the surface, it seems like it should be fairly simple to figure out the price of oil since it all boils down to just two elementary factors. But this isn't an easy task. Just ask all the highly trained and experienced hedge-fund managers, professional speculators and others who have lost their shirt by betting incorrectly on the price of oil during the last couple of years.See the full content of this document
Extract
Oil Market Lessons
The price of oil has gyrated wildly during the last few years. I can recall when oil sold for $3 and $4 per barrel and the price range over the course of a year was less than $1. Last year, the price went up or down more than $4 in a single day, as the price o...
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