Solve a mystery or rewrite history

April 21, 2009 in Finance

Uh-oh, the naive journalist has even more naive readers:

In response to my article on the financial mess, Goldblog reader Dan Simon writes in to explain the market's recent follies.

I am not going to print the explanation here lest someone read it, but basically it claims that the pre-1980 stock market was a beacon of efficiency which - if I understand this correctly - always went up.  However, since we started letting in the dregs of society - uninformed zombie investors who only buy indices - the self-regulating cycle has broken down because these numerous fools only buy and never sell (which begs the question, from whom are they actually buying?). And then there's a dodgy appeal to the "fixed income" equity valuation model, in which index price and yield are inversely related, followed by absolutely no indication of 1) why there was a market crash or 2) thinking.

Somewhere, Dan Simon is swimming in his money bin and laughing. Relatedly, bonus points for knowing the title (Google is out of bounds).

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