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THE MARKET WHISPERER 45 7

The logic of the market is
the illogic of the individuals

trading in the market.

Examine the Basic Premises

At a university, students of economics are taught two important basic
premises:
1. Financial markets are effective.
2. The individuals active in the market operate logically.

Most economists claim that people trading in the market have all the
relevant information, and they use it to achieve their personal goals with
the highest level of efficiency.

I ask you: true or false?

Market Psychology

As a disciplined student, I must accept the conclusion of the academic
consensus, read and understand the logic inherent in company profit and
loss reports, and invest my money according to these premises.

For years, the approach of economists has consistently been the above.
But informally, we all know that something here is not quite right. We
found that the market has a life of its own, and in many instances, we
saw market behavior completely contradict these economic premises.
After all, if life were so simple, we would be able to read the economists’
recommendations, buy shares of various companies at lower than their
real value, and always make money.

But not anymore! Formally, we now acknowledge the fact that
alongside the fundamental economic approach, there is also the safe
and secure psychological approach. We have moved into the era of the